The New Taiwan Dollar has lost 13% of its value compared to the US dollar this year. Central Bank Governor Yang Chin-long said on Thursday that rising interest rates in the US are driving this slide.
But Yang says the Taiwanese currency's value is relatively stable when compared to other currencies. He adds that Taiwan's central bank has already sold US$8.25 billion in foreign exchange reserves this year to help control the drop in exchange rate.
Reports predict that US interest rates will continue to rise throughout the rest of the year. But Yang says for now US benchmark interest rates are only about 1% higher than Taiwan's. That means investors have less incentive to shift their funds to the United States to get better returns.
Yang adds that the US interest rate will likely fall again within the next year. When the interest rate falls, he warns that it may be difficult for investors to pull their money out of the US.
Yang says the government has a management system to control the sale of foreign exchange reserves, and it will keep the central bank informed about any changes.