Lending extended by Taiwanese banks to the US continued to hit a record high at the end of last year on the back of a recovery in the US economy and a stronger US dollar, the central bank said in a report issued on Wednesday.
However, the banks’ exposure to China kept falling, reflecting slowing growth in the world’s second-largest economy and the weakness of the yuan against the US dollar, the report said.
At the end of December last year, outstanding international claims by Taiwanese banks to the US on a direct risk basis had risen to US$69.68 billion from US$67.17 billion recorded at the end of September, the report said.
On an ultimate risk basis, which calculates a nation’s consolidated debts after risk transfers, Taiwanese banks’ exposure to the US had also risen to US$67.36 billion at the end of the fourth quarter of last year from US$63.59 billion posted in the previous quarter, the report said.
The US replaced China as the nation with the most debt to Taiwan at the end of June last year, and the US’ debt has continued to rise since then.
The central bank said that after the US Federal Reserve began a cycle of interest rate hikes in December last year, more Taiwanese firms have been parking funds in the US. In addition, Taiwanese banks have become more willing to hold US treasuries, eyeing higher interest incomes, the bank said.
At the end of December, Taiwanese banks’ outstanding international claims to China on a direct risk basis fell to US$38.01 billion from the previous quarter’s US$40.29 billion, while the banks’ exposure to China on an automated risks basis fell to US$55.77 billion from US$56.87 billion, the report showed.
China remained the second-largest debtor to Taiwan, even as Taiwanese enterprises cut back investments there. That led to a decline in borrowing from Chinese banks by their Taiwanese counterparts and a drop in Taiwanese banks’ deposits placed in their Chinese accounts.
After the US and China, Luxembourg ranked as the third-largest debtor to Taiwan at the end of December on a direct risk basis, with Taiwanese banks lending US$35.56 billion to the country.
Japan came in fourth with US$31.68 billion in debt, ahead of Hong Kong with US$31.27 billion, the UK with US$16.28 billion, the Cayman Islands with US$14.95 billion, Australia with US$14.75 billion, the British West Indies with US$13.23 billion and Singapore with US$12.60 billion.
At the end of December, outstanding international claims by the Taiwanese banking sector on an ultimate risk basis fell US$7.1 billion to US$363.8 billion, representing a decline of 1.91 percent from the previous quarter, the central bank said.
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