Central bank Governor Perng Fai-nan (彭淮南) said the nation's US$111.7 billion in foreign exchange reserves should not be used to intervene in the stock market, local media reported yesterday.
Perng said it is "inappropriate" to use the reserve to support the market as that pool of money is designed to meet liquidity demand arising from overseas trades.
Perng also said the Hong Kong government curbed arbitrary trading by speculators and defended its currency and stocks during the Asian financial crisis through domestic funds and not foreign exchange reserves.
The TWSE Index was the worst performing in the world in September in US dollar terms, down 16.3 percent.
The government began an aggressive plan to intervene in the stock market on Oct. 3 when the head of the National Stabilization Fund (
The management committee of the National Stabilization Fund has authorized Yen Ching-chang (顏慶章), the executive secretary of the stabilization fund and minister of finance, to use the fund to intervene in the stock market through Oct. 15, depending on conditions.
The fund has intervened in the market three times since earlier this year. Among the sources of the stabilization fund, NT$200 billion is borrowed from the National Treasury through the banking industry, and another NT$300 billion from four government funds.
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