The nation’s foreign exchange reserves hit another all-time high at the end of last month due to an increase in returns on the portfolio managed by the central bank, the bank said on Friday.
Several non-US dollar currencies in the portfolio appreciated against the greenback. When assets denominated in those currencies were converted into US dollars, the foreign exchange reserves also grew.
Taiwan’s foreign exchange reserves last month rose US$409 million from a month earlier to US$461.78 billion, a new high for the second consecutive month, central bank data showed.
The nation’s foreign exchange reserves rose 2.27 percent from the end of 2017 to the end of last year, the data showed.
The US dollar last month weakened against other major currencies, boosting the value of the foreign exchange reserves, Department of Foreign Exchange Director-General Harry Yen (顏輝煌) said.
The euro last month appreciated 0.65 percent against the US dollar, the Japanese yen rose 2.78 percent and the Chinese yuan gained 1.56 percent, while the Australian dollar and British pound moved lower, he said.
Foreign investors’ holdings of local stocks, bonds and New Taiwan dollar-denominated deposits last month totaled US$336.3 billion, a dip from US$344.2 billion a month earlier, the central bank said.
Foreign-held assets at the end of last month were equivalent to about 73 percent of the nation’s foreign exchange reserves, a 75 percent decrease from a month earlier, the central bank data showed.
The decline reflected a move by foreign investors to cut their holdings in local equities amid volatility in global financial markets and remit their funds out of Taiwan’s market, the central bank said.
The central bank has repeatedly said that it is committed to maintaining ample foreign exchange reserves by improving investment returns to guarantee secure financial markets at home, even if foreign institutional investors move funds out of the nation.
The NT dollar on Friday rose against the greenback, gaining NT$0.023 to close at NT$30.863, but dropped 0.4 percent from NT$30.733 on Dec. 28. Turnover in the trading session totaled US$1.027 billion.
The US dollar opened at NT$30.860 and moved between NT$30.850 and NT$30.897 before the close.
Elsewhere on Friday, the US dollar retreated against the euro, giving up all the gains logged after a robust US jobs report, following comments from US Federal Reserve Chairman Jerome Powell that the US central bank would be sensitive to downside risks the market has been pricing in.
“We will be patient as we watch to see how the economy evolves,” Powell told the American Economic Association on Friday.
The Fed is not on a preset path of interest rate hikes, Powell said, suggesting that it could pause its policy tightening as it did in 2016.
“Powell’s comments that the Fed is prepared to alter policy expectations quickly and flexibly are weighing on the US dollar and giving risk sentiment a boost,” Credit Agricole Group foreign exchange strategist Eric Viloria said in New York.
“Overall, Powell’s tone is cautious, which is contributing to US dollar softness,” Viloria said.
The euro was 0.09 percent higher at US$1.1401 against the greenback.
Earlier in the day, the eurozone’s single currency fell as low as US$1.1347 against the US dollar after the greenback rose following data showing that US employers last month hired the most workers in 10 months while boosting wages.
The data contrasted with reports earlier this week signaling that the global economy is slowing.
China posted data showing that factory activity last month contracted for the first time in 19 months and there was evidence of weak manufacturing across much of Europe and Asia.
Against the Japanese yen, the US dollar was 0.7 percent higher.
The Australian dollar recovered after being hit hard in a scramble for safety on Thursday and was up 1.6 percent.
Most emerging-market currencies rebounded. The South African rand and the Turkish lira each gained more than 2 percent against the greenback.
The Canadian dollar logged its third consecutive day of gains after touching an almost 20-month low earlier in the week.
Sterling jumped after suffering heavy losses spurred by fears of a global economic slowdown, but uncertainty about Brexit kept gains in check.
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