Taiwan's central bank said its foreign‑exchange reserves fell sharply in March, shedding $8.6 billion to end the month at $596.9 billion. The drop marks the steepest monthly decline since 2011 and stems from active dollar sales aimed at defending the Taiwan dollar amid heightened capital outflows linked to the Iran‑Israel conflict. Investors fled local equities as risk aversion rose, forcing policymakers to intervene.

Eugene Tsai, head of the monetary authority’s foreign‑exchange unit, told reporters the intervention was complemented by heavy dollar sales from exporters, which further drained reserves. He noted that a monthly loss exceeding $8 billion sits “slightly on the high side.” The move mirrors similar actions in Indonesia and India, where central banks also tapped reserves to curb currency weakness.

For investors, the reserve contraction signals that Taiwan may continue to use foreign‑exchange buffers to stabilize its currency, potentially limiting the pool of funds available for sovereign debt issuance or market interventions. With the US dollar remaining firm and oil prices elevated, policymakers face a trade‑off between defending the exchange rate and preserving liquidity for future shocks, as market participants watch closely for signs.