TAIPEI (Reuters) – Taiwan’s negative real interest rates could affect decision-making on whether to raise interest rates, its newly-appointed governor Yang Chin-long told parliament on Thursday.
Yang told parliamentarians the central bank’s rate decisions will be made based on factors including the negative interest rates, foreign-exchange rates and the island’s output gap.
The central bank’s next rate-setting meeting is March 22.
Yang also urged small and medium-sized companies to take “appropriate risk aversion measures” due to risks from currency volatility.
The central bank will adopt a “flexible approach to manage floating exchange rate,” he said. “Exchange rate fluctuation could sometimes be very large, and it will be a thankless effort to try to turn the trend around.”
Taiwan was removed from Washington’s list of possible currency manipulators in October because it had continued to reduce the scale of its foreign exchange interventions.
(Reporting by Liang-sa Loh and Yimou Lee; Editing by Richard Borsuk)