TAIPEI Taiwan's central bank will intervene in the foreign exchange market if there are "extreme" fluctuations to maintain financial stability, its governor Yang Chin-long said on Wednesday.

The Taiwan dollar has lost more than 5% of its value against the surging greenback so far this year and is at a more than seven-year low, as the export-dependent economy faces headwinds from slowing global demand for technology, Taiwan being a major producer of semiconductors.

Taking lawmakers' questions in parliament, Yang said the central bank will intervene in the forex market as needed if there are "extreme" fluctuations, as they seek to slow the Taiwan dollar's depreciation.

"If we don't do this, it will threaten our financial stability," he added.

The U.S. Treasury Department in June kept Taiwan on a monitoring list for close attention to foreign exchange and economic policies.

Yang said Treasury "didn't really mind" about Taiwan intervening to arrest the Taiwan dollar's depreciation.

The central bank this week said it sold a net $880 million to intervene in the forex market in the first half of this year, stepping in to maintain smooth market operations as the island contends with soft economic growth.

The central bank last month flagged continued tight monetary policy as it keeps a close eye on inflation, and trimmed its 2023 growth forecast for the export-reliant economy. It also keep its benchmark interest rate unchanged.

Yang said the current global interest rate cycle was nearing an end, and that Taiwan would be "no exception".

(Reporting by Faith Hung and Liang-sa Loh; Writing by Ben Blanchard; Editing by Tom Hogue and Kim Coghill)