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UPDATE 1-Taiwan c.bank says will maintain Taiwan dollar exchange rate stability

* C.bank gov Yang says will intervene if large capital inflows, outflows

* Taiwan dollar has gained 5% vs greenback this year (Recasts, adds details, context)

TAIPEI, Oct 15 (Reuters) - Taiwan’s central bank will maintain the stability of the Taiwan dollar exchange rate, intervening in the currency market if there are large capital inflows or outflows, governor Yang Chin-long said on Thursday.

The central bank will pay close attention to market movements in order to ensure stability, Yang said, taking questions from lawmakers in a session at parliament.

The Taiwan dollar climbed 0.8% in Thursday morning trade and is Asia’s top-performing currency this year. It has benefited from stronger exports from the tech powerhouse island, helped by demand for laptops and tablets to support the work-from-home trend during the COVID-19 pandemic.

The currency has gained around 5% against the greenback so far this year, making the island’s exports more expensive. Yang said the strong Taiwan dollar was not a problem for the high-tech sector, but more troubling for traditional manufacturers.

The bank said earlier this week it had bought U.S. $3.9 billion in the first half of this year, more than half what it spent in 2019, to intervene in the foreign exchange market to help keep the local currency in check.

The U.S. $5 billion Taiwan bought last year in market intervention is well below the roughly $12 billion that could cause the U.S. Treasury Department to label it a currency manipulator.

However, last year Taiwan exceeded thresholds in two other criteria Washington uses for assessing whether to put trade partner nations on its currency manipulation monitoring list.

Taiwan’s 2019 trade surplus with the United States hit $23 billion, exceeding an assessment threshold of $20 billion. Meanwhile Taiwan’s current account surplus was 10.5% of gross domestic product last year, well above the monitoring threshold of 2%.

The island was last formally labelled a currency manipulator by the United States in December 1992, but was later put on the U.S. Treasury monitoring list in 2016 and 2017. (Reporting by Liang-sa Loh; Writing by Ben Blanchard; Editing by Richard Pullin and Kenneth Maxwell)

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