Taiwan’s balance of payments (BOP) showed the longest period of net capital outflows in the nation’s history, as the insurance sector and certain other sectors continued to invest in overseas securities, the latest central bank data showed.
However, the bank said the trend of capital outflows still indicated a balance between the BOP’s financial account and current account, which helps prevent savings from becoming excessive and the New Taiwan dollar from facing heavy appreciation pressure.
The BOP, which includes the current, financial and capital accounts, summarizes the net amount of money paid or received by a nation in a certain period.
Based on the bank’s latest report, the financial account recorded a net outflow of US$10.08 billion in the April-to-June quarter, up US$2.32 billion from a year earlier, and also the 12th consecutive quarter that it has posted a net outflow, the longest recorded to date.
Lin Shu-hua (林淑華), a deputy chief of the bank’s economic research department, attributed the continuous outflow to investment in overseas bond products by local insurance companies and an increase in overseas lending by offshore banking units (OBU).
Overall, direct and portfolio investment registered net outflows of US$2.18 billion and US$3.2 billion respectively in the second quarter, bank data showed.
The continuous outflow is helping to maintain the nation’s financial stability, Lin said, with current accounts in Taiwan posting a substantial surplus.
The nation’s current account surplus totaled US$13.8 billion in the second quarter, up from the US$10.89 billion recorded in the same period last year, the bank said.
The trade surplus widened to US$10.26 billion in the second quarter, an increase of NT$4.5 billion compared with the same period last year, statistics showed.
Meanwhile, the surplus on services was US$1.92 billion, similar to the level recorded a year ago, according to the bank’s data.
Taiwan had a BOP surplus of US$3.88 billion during April-to-June period, up from the NT$3.11 billion recorded in the same period last year, the report said.