TAIPEI, Nov 2 (Reuters) - Taiwan's central bank said on Wednesday it will intervene in a timely manner to maintain the Taiwan dollar's "dynamic stability" if needed and take immediate corrective measures if there are abnormal foreign exchange fund flows.
The Taiwan dollar has depreciated around 14% against the greenback so far this year while the benchmark stock index has dropped 28% due to aggressive U.S. interest rate increases and U.S. dollar strength as well as worries over slowing global economic growth.
The bank, in a report to parliament, said it is continuing to pay close attention to cross-border capital movements and that since the start of this year net foreign exchange sales have held back the Taiwan dollar's fall.
The central bank has international agreements meaning it can obtain U.S. dollar funds to support U.S. dollar liquidity if needed, it added.
The currencies of Japan and South Korea, which compete with Taiwan in exports, have also sharply fallen this year, but the central bank said the Taiwan dollar's exchange rate has been "relatively stable" compared to other major currencies.
"Maintaining the stability of the Taiwan dollar exchange rate is conducive to price quotations for and operations of manufacturers and entry and exit of investors' funds, and also contributes to domestic financial stability and economic growth," it said.
The report was issued ahead of central bank governor Yang Chin-long taking lawmaker questions in parliament on Thursday.
Yang said in September there would be no foreign exchange controls during his tenure at the bank, adding management measures were sufficient to maintain market stability if there were large capital outflows.
Yang's five-year term is due to expire early next year. He can be reappointed for a second term though there has been no confirmation either way. (Reporting by Liang-sa Loh and Ben Blanchard; Editing by Tom Hogue and Christian Schmollinger)
