Long swing in appreciation and short swing in depreciation and does the market not know it?—the case of Taiwan

This paper finds an asymmetric swing in Taiwan's exchange rate. In contrast to the developed countries, whose exchange rates exhibit long swings in both appreciation and depreciation regimes, the long swing only exists in an appreciation regime for Taiwan. A short swing, however, is found during a depreciation regime in Taiwan. These results may reflect to some extent the central bank's preference, which is to have a let-it-go policy during depreciation and a slowdown policy in appreciation. In addition, it may simply reflect the Japanese yen's influences.