Net foreign capital inflows increased US$3.904 billion last month, the fourth monthly expansion in a row and also the largest since April, to reach US$165.758 billion, the Financial Supervisory Commission said in a statement on Tuesday.
Based on the commission’s definition, foreign capital inflows include those from foreign institutional investors, foreign individual investors, Chinese institutional investors and overseas Taiwanese investors.
The continued inflows of overseas capital in recent months have significantly boosted the value of the NT dollar against the US dollar, despite suspected intervention by the central bank from time to time.
In Taipei trading, the NT dollar appreciated by 5.4 percent to close at NT$30.368 against the US dollar on Dec. 31, from NT$32.102 on Aug. 31, according to the central bank’s tallies.
The local currency traded at NT$30.211 against the greenback yesterday, down NT$0.01 from Tuesday.
RESERVE REQUIREMENT
Last week, the central bank announced that local lenders would be required to set aside 90 percent of foreign investors’ new deposits as reserves, compared with the previous level of 9.775 percent, and said it would not pay interest to lenders for those required reserves, a measure market watchers said was aimed at tightening market liquidity against NT dollar speculation.
EXCESS LIQUIDITY
That measure could also help divert excess liquidity into the local equity market to meet the central bank’s expectations, they said.
Based on the commission’s latest statistics released on Tuesday, overseas investors reported a net purchase of NT$290.9 billion (US$9.63 billion) in -Taiwanese shares on the Taiwan Stock Exchange and the GRETAI Securities Market last year, as a result of purchases of NT$5.585 trillion and sales of NT$5.294 trillion in shares.
The net purchase figure was down from NT$510.7 billion in 2009, when overseas investors took NT$5.354 trillion in shares and sold NT$4.843 trillion, according to the commission’s data.
For the whole of last year, the benchmark TAIEX rose 9.58 percent on the Taiwan Stock Exchange, while the over-the-counter index dropped 4.07 percent on the GRETAI Securities Market.
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