Traders said the overnight interbank rate was lowered to 0.20 percent from Friday's 0.23 percent.
The last time the central bank began guiding market rates lower it followed the moves by cutting the official policy rate. The central bank cut the discount rate in late December, the second rate cut it made in 2015 in a bid to revive flagging economic growth.
Taiwan's financial markets are open on Saturday for a special trading session ahead of the upcoming Lunar New Year holiday.