Taiwan’s central bank has reaffirmed its trust in U.S. Treasury debt and the dollar’s reserve status amid surging currency volatility sparked by American tariffs and speculative trading.
At a Glance
- Taiwan’s central bank declared U.S. debt “stable” and reaffirmed the dollar as a global reserve currency
- The Taiwan dollar surged sharply, prompting warnings against irresponsible market speculation
- Authorities cited foreign investors using FX channels without making declared equity investments
- Over 80% of Taiwan’s $582.8 billion in reserves are in U.S. Treasuries
- The central bank vowed to enforce tighter guidelines to stabilize currency markets
A Vote of Confidence in U.S. Debt
In response to recent market turbulence triggered by new U.S. tariffs, Taiwan’s central bank has defended its large holdings of U.S. Treasury bonds. “U.S. public debt is stable, liquid, and favored as a store of value,” the bank stated, amid fears of a dollar downturn. With over $582 billion in foreign exchange reserves—more than 80% in Treasuries—Taiwan’s endorsement was meant to ease concerns of a potential global shift away from the dollar.
This reassurance comes amid broader speculation over de-dollarization and whether Washington under President Trump favors a weaker dollar to boost exports. Taiwan’s position remains clear: the dollar’s status is not under threat.
Watch a report: Taiwan Central Bank Assures US Debt is Sound.
Currency Surge Triggers Warning
Following Trump’s tariff announcement, the Taiwan dollar appreciated sharply for two straight days—the steepest move since the 1980s. In response, Governor Yang Chin-long issued a stern warning to analysts and investors: “We solemnly urge market commentators not to speculate irresponsibly about the foreign exchange market.”
Taiwan’s central bank also noted that some foreign investors had converted large USD sums into Taiwan dollars without purchasing the local equities they had declared, raising concerns about using FX channels for speculative gain rather than real investment. The bank said such practices risk destabilizing the broader economy and would be monitored closely.
Rules, Not Rumors
To prevent further volatility, the central bank reminded banks and fund managers of their obligation to ensure that incoming capital is used for its declared purpose—namely, domestic securities investments. Media professionals were also cautioned: reckless commentary could amplify panic and disrupt markets.
This policy shift aims to clamp down on short-term currency speculation, which the bank views as incompatible with Taiwan’s long-term economic strategy. Foreign exchange rules are expected to be more strictly enforced in the coming weeks.
Broader Global Implications
Taiwan’s public support for U.S. Treasury debt comes at a time when global trust in American financial instruments remains a pillar of economic stability. Amid tensions over tariffs and shifting geopolitical alignments, the island’s statement serves as a signal to other Asian economies that the dollar, and by extension U.S. bonds, remain dependable anchors—even in turbulent times.
As volatility rattles Asian markets, Taiwan’s central bank is clearly signaling: financial confidence must be grounded in discipline—not speculation.
