Taiwan’s Foreign Exchange Reserves: December 2025 Update and Macro Outlook
Taiwan’s foreign exchange reserves edged slightly lower to TWD 599.79 billion in December 2025, marking a subtle decline from November’s TWD 600.20 billion. This report leverages the latest data from the Sigmanomics database, placing the current reading in historical context and assessing its implications for Taiwan’s macroeconomic landscape. We explore key drivers, monetary and fiscal policy interplay, external risks, and market sentiment to provide a forward-looking analysis.
Table of Contents
Taiwan’s foreign exchange reserves remain robust near the TWD 600 billion mark, reflecting steady external asset accumulation despite recent volatility. The December 2025 figure of TWD 599.79 billion is marginally below November’s 600.20 billion but well above the early 2025 average of approximately TWD 578 billion. This stability underscores Taiwan’s resilient external position amid global uncertainties.
Drivers this month
- Modest capital outflows linked to regional geopolitical tensions.
- Central bank interventions to stabilize the TWD exchange rate.
- Steady export earnings supporting reserve replenishment.
Policy pulse
The Central Bank of the Republic of China (Taiwan) maintains a cautious stance, balancing reserve adequacy with inflation control. The reserves level remains comfortably above the three-month import cover threshold, supporting monetary policy flexibility.
Market lens
Immediate reaction: The TWD/USD spot rate showed minor appreciation of 0.10% post-release, reflecting market confidence in Taiwan’s external buffers. Short-term bond yields remained stable, signaling muted volatility.
Foreign exchange reserves are a critical macroeconomic indicator, reflecting Taiwan’s ability to meet external obligations and buffer shocks. The current reserves of TWD 599.79 billion represent a 0.07% month-over-month (MoM) decline but a 3.70% year-over-year (YoY) increase from December 2024’s TWD 578 billion.
Monetary policy & financial conditions
Taiwan’s monetary policy remains data-driven, with the central bank monitoring reserve levels closely. The stable reserves support a neutral policy stance, allowing gradual interest rate adjustments without risking capital flight. Financial conditions remain accommodative, with credit growth steady at 5.20% YoY.
Fiscal policy & government budget
Fiscal discipline continues to underpin Taiwan’s macro stability. The government’s budget surplus of 1.10% of GDP in Q3 2025 has helped maintain confidence in external balances. Foreign exchange reserves provide a buffer against fiscal shocks, especially given Taiwan’s export-dependent economy.
External shocks & geopolitical risks
Heightened geopolitical tensions in the Taiwan Strait and broader Indo-Pacific region pose downside risks. Any escalation could trigger capital flight or disrupt trade, pressuring reserves. However, Taiwan’s diversified export markets and prudent reserve management mitigate these risks.
Market lens
Immediate reaction: The TWD/USD currency pair showed a modest 0.10% gain, while 2-year government bond yields held steady at 1.35%. Market sentiment remains cautiously optimistic, with investors viewing the stable reserves as a sign of Taiwan’s external resilience.
This chart highlights Taiwan’s foreign exchange reserves trending upward over the past year, reversing a two-month decline. The stability near TWD 600 billion signals strong external buffers, supporting investor confidence amid global uncertainties.
Looking ahead, Taiwan’s foreign exchange reserves face a mix of opportunities and risks. The export sector’s strength and prudent monetary policy support a stable or rising reserve trajectory. However, geopolitical tensions and global financial market volatility could pressure reserves downward.
Bullish scenario (30% probability)
- Continued export growth lifts reserves above TWD 610 billion by mid-2026.
- Stable geopolitical environment reduces capital outflows.
- Central bank interventions enhance reserve accumulation.
Base scenario (50% probability)
- Reserves fluctuate between TWD 590–605 billion through 2026.
- Moderate geopolitical tensions cause temporary volatility.
- Monetary policy remains balanced, maintaining reserve adequacy.
Bearish scenario (20% probability)
- Escalation in regional tensions triggers capital flight, dropping reserves below TWD 580 billion.
- Global recession dampens export earnings.
- Central bank forced to deploy reserves aggressively to stabilize currency.
Taiwan’s foreign exchange reserves remain a cornerstone of its macroeconomic stability. The December 2025 reading of TWD 599.79 billion reflects a resilient external position despite minor month-to-month fluctuations. Maintaining reserves near the TWD 600 billion threshold provides the central bank with ample policy space to navigate inflation, currency stability, and external shocks.
Balancing upside potential from export growth against downside geopolitical risks will be critical. Investors and policymakers should monitor reserve trends closely as a barometer of Taiwan’s external health and financial market confidence.
Key Markets Likely to React to Foreign Exchange Reserves
Foreign exchange reserves influence currency strength, bond yields, and equity markets in Taiwan and the broader region. The following tradable symbols historically correlate with reserve movements and provide actionable insights:
- TWDUSD – The Taiwan dollar’s exchange rate directly reflects reserve adequacy and central bank interventions.
- 2330.TW – Taiwan Semiconductor Manufacturing Company, a bellwether for export-driven capital flows.
- 0050.TW – Taiwan’s top ETF, sensitive to macroeconomic shifts including reserve changes.
- BTCUSD – Bitcoin’s price often reacts to shifts in risk sentiment linked to currency and reserve volatility.
- USDCNH – The offshore Chinese yuan’s exchange rate, which can influence regional capital flows affecting Taiwan’s reserves.
Insight: Foreign Exchange Reserves vs. TWDUSD Since 2020
Since 2020, Taiwan’s foreign exchange reserves and the TWDUSD exchange rate have shown a strong inverse correlation. Periods of reserve accumulation coincide with TWD appreciation, while reserve drawdowns align with depreciation phases. This dynamic underscores the central bank’s role in managing currency stability through reserve adjustments.
FAQs
- What are Taiwan’s foreign exchange reserves?
- Foreign exchange reserves are assets held by Taiwan’s central bank to back liabilities and stabilize the currency.
- How do reserves affect Taiwan’s economy?
- Reserves provide a buffer against external shocks, support monetary policy, and influence investor confidence.
- Why did Taiwan’s reserves decline slightly in December 2025?
- The minor decline reflects seasonal trade patterns and cautious central bank interventions amid geopolitical uncertainties.
Key takeaway: Taiwan’s foreign exchange reserves remain stable near TWD 600 billion, supporting macroeconomic resilience amid global and regional risks.
This has been drafted with AI assistance and then thoroughly reviewed, refined, and approved by our human editorial team to ensure accuracy, and originality.
The December 2025 foreign exchange reserves of TWD 599.79 billion show a slight dip from November’s TWD 600.20 billion but remain above the 12-month average of TWD 589.50 billion. This marks a continuation of a generally upward trend since early 2025, when reserves hovered near TWD 578 billion.
Monthly fluctuations reflect typical seasonal trade cycles and central bank interventions. The reserves peaked at TWD 602.94 billion in October 2025 before a mild correction in November and December.