Macroeconomic Forecast Taiwan

The Central Bank of the Republic of China continued to add to its hoard of foreign exchange reserves through February, with holdings swelling a further US$2.0bn over the course of the month. Taiwan's holdings came in at a mighty US$352.7bn, up 19.9% y-o-y and equivalent to US$15,231 per resident. February's build-up was in line with that seen through recent months as the Taiwanese authorities attempted to hold down the value of the TWD in order to support the island's export-led recovery. Through 2010 we believe that the CBRC will continue to add to its foreign currency stash, forecasting end-2010 reserves to come in at US$379.2bn, although do expect intervention to moderate as inflation returns to the Taiwanese economy.

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