Taiwan’s Exchange-Rate Policy and Its Current Challenges

Ti-Jen Tsao ()
Additional contact information
Ti-Jen Tsao: Central Bank of the Republic of China (Taiwan)

Chapter Chapter 5 in Monetary Policy Implementation in East Asia, 2020, pp 61-71 from Springer

Abstract: Abstract Cross-border capital flowsCapital flowCross-border capital flow account forCross-border capital flowCapital flow a significant share of Taiwan’s interbank foreign exchange transactionsForeign exchangetransactions, and some active foreign investorsForeign investors play a key role in the total of foreign capital flows. Large and frequent short-term capital movementsCapital movement pose one of the major threats to financial stabilityFinancial stability/instability in Taiwan. Confronted with this challenge, the Central Bank of the Republic of ChinaCentral Bank of the Republic of China, Taiwan (CBC) (Taiwan), or CBC, employs a range of measures to manage the foreign exchange marketForeign exchangemarket and capital movements. This practice fulfils the CBC’s legal mandate of maintaining the stable value of the new Taiwan dollarNew Taiwan Dollar (NTD) (NTD) to underpin economic growthEconomic growth in Taiwan. Because of great dependency on imported energy, high foreign portfolio investmentPortfolio investment, the lack of International monetary FundInternational Monetary Fund (IMF) (IMF) membership and reserve currencyReserve currency status, Taiwan’s reserve holdings stay at a relatively high level, which provides a necessary buffer to reduce excess volatilityVolatility in the NTD exchange rate, instead of any attempt at competitive depreciation.

Date: 2020
References: Add references at CitEc
Citations:

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:spr:fimchp:978-3-030-50298-0_5

Ordering information: This item can be ordered from
http://www.springer.com/9783030502980

DOI: 10.1007/978-3-030-50298-0_5

Access Statistics for this chapter

More chapters in Financial and Monetary Policy Studies from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().