Mon, May 08, 2017 - Page 16 News List

Nation’s forex reserves hit new high

EASED TENSIONS:As well as a stronger euro, forex reserves have benefited from a massive influx of foreign funds buying local equities and bonds, the central bank said

Staff writer, with CNA

The nation’s foreign-exchange reserves last month hit a new high, due in part to an increase in returns in the central bank’s management of the assets during the month.

A stronger euro, boosted by the reduction in fears of a populist victory in the French presidential election, raised the value of Taiwan’s euro-denominated reserves when converted into US dollars, the bank said in a statement on Friday.

The reserve rose US$900 million from the end of March to US$438.43 billion, the bank said.

Department of Foreign Exchange Director-General Harry Yen (顏輝煌) said the euro last month gained about 1.8 percent against the US dollar.

Analysts said that continued foreign fund inflows into the region, including Taiwan, amid eased geopolitical tensions also helped to pave the way for a new high in forex reserves.

However, the central bank said that there were no signs that foreign investors had moved funds into Taiwan to speculate on the local foreign exchange market.

Foreign institutional investors recorded net fund inflows of US$1.27 billion last month, the Financial Supervisory Commission said.

The fund inflows resulted in a net purchase of US$1.16 billion worth of shares in local equities last month, Yen said.

As of the end of last month, foreign investors held positions on local equities and bonds worth US$353.8 billion, an increase of US$7.8 billion from March, local equities and bonds., the central bank said.

That accounted for 81 percent of Taiwan’s total forex reserves, up 2 percentage points from the end of March, the central bank said.

The foreign inflows have caused the New Taiwan dollar to appreciate against the US dollar. The NT dollar on Friday closed at NT$30.182 against the greenback and in the previous few sessions, it breached NT$30 before falling back.

Since the beginning of this year, the NT dollar has gained almost 6.5 percent against the US dollar on the back of fund inflows.

Yen said the central bank is watching closely how the US Federal Reserve adjusts its monetary policy after the Fed on Wednesday said that it expected the US economy to grow at a fast pace for the rest of the year which boosted market expectations that the US central bank plans to raise its key interest rates in the next policymaking meeting next month.

A rate hike in the US would likely make the US dollar stronger, which could prompt foreign investors to move funds out of non-US dollar-denominated assets.

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