US debt is 'sound', no concerns about US dollar's reserve role, Taiwan's central bank says
TAIPEI :Taiwan's central bank said on Sunday that U.S. government debt is "sound" and still favoured by investors, and there are no worries about the U.S. dollar's position as the leading international reserve currency.
U.S. President Donald Trump's tariff announcement on April 2, which led to a market rout, including in U.S. Treasuries, has cast doubt over the dollar's safe-haven status.
Trump's has made complaints about a strong dollar which have also triggered speculation that Washington wants an adjustment lower in the U.S. currency.
Taiwan's $582.8 billion in foreign exchange reserves are more than 80 per cent made up of U.S. Treasury bonds, according to the island's central bank.
The central bank, responding to what it said were market concerns about U.S. bonds and the U.S. dollar, said on its website there was no cause for alarm.
"There are still no concerns about the U.S. dollar's position as the leading international reserve currency," it said. "U.S. public debt is stable and has good liquidity, and its function as a store of value is still favoured by investors."
The central bank also called on the media and market commentators not to speculate about the foreign exchange rate, given the Taiwan dollar's surge since last month against the U.S. currency on speculation Washington had asked Taipei to let it strengthen as part of tariff talks.
The central bank has repeatedly denied that the United States has made that request.
In its Sunday statement, the central bank said its inspection teams had found that some foreign investors, whom it did not name, had transferred large sums into Taiwan dollar deposit accounts ostensibly to invest in Taiwan stocks.
But no such investments took place, it said, adding foreign investors must use remitted funds to invest in domestic securities if that is what they have declared the money for "and not use the funds to speculate on the Taiwan dollar's exchange rate".
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