The Central Bank has significantly increased its issuance of time deposits in May, with the balance of undisbursed time deposits soaring to 7.8 trillion by the end of May, an increase of 322.89 billion in the month. Since April, the New Taiwan Dollar has seen a strong appreciation, particularly experiencing a dramatic rise in early May, prompting exporters to panic and sell off foreign currency, along with a surge in foreign hot money entering the market. In response to the excessive liquidity in the current market, the Central Bank has shifted from its initial plan of reducing deposits to an increase, issuing a total of 630.325 billion in April and May, approaching the 8 trillion target by the end of 2023.

According to the Central Bank's statistics, the New Taiwan Dollar appreciated 3.64% against the U.S. dollar in April, and a remarkable 6.98% in May, marking the strongest monthly increase in 36 years. The influx of foreign and export capital has urged the banking sector to urgently liquidate funds. Banking executives have stated that the Central Bank began increasing time deposits in April to absorb excess liquidity, having issued over 300 billion in time deposits for two consecutive months.

However, as the exchange rate stabilized in mid-May, alongside the impending tax payment season and large cash dividend distributions for the third quarter, it remains to be seen whether short-term liquidity will continue to ease. Observing the Central Bank's operations over the past year, liquidity had been relatively tight with a reduction plan in place last year, but this year has seen a reversal, with cumulative amounts withdrawn from the market close to 600 billion. During the pandemic, the balance of time deposits soared above 9 trillion due to the influx of funds from overseas Taiwanese businesses, and now, with the renewed appreciation of the NT dollar, these balances are approaching the 8 trillion mark once again.

The market generally expects that the Central Bank will not reduce rates this year, and the situation of excessive liquidity from the past is unlikely to return. The Central Bank uses time deposits as its primary tool for adjusting market liquidity, issuing 7-day, 28-day, and regular 91-day and 182-day deposits to provide banks with avenues for managing excess funds.