Thu, Apr 27, 2017 - Page 1 News List

Rise in NT dollar expected to hurt life insurance firms

By Ted Chen  /  Staff reporter

US dollar bills are pictured on Tuesday. As the New Taiwan Dollar appreciates, the appreciation has hurt the profits of life insurance companies with overseas investments due to exchange rate losses.

Wang Meng-lun, Taipei Times

The New Taiwan dollar yesterday strengthened against the US dollar for the fifth consecutive session, gaining NT$0.001 to close at NT$30.151, a trend that could play havoc with local exporters and life insurance companies.

The NT dollar rose by as much as NT$0.164 intraday, trading at NT$29.988 against the greenback on the back of continued foreign fund inflows and end-of-the-month US dollar selling by local exporters, dealers said.

Turnover expanded to US$1.149 billion, a surge of more than 70 percent from US$666 million a day earlier, reflecting unabated buying interest in the NT dollar, dealers said.

A strong NT dollar has put pressure on export-oriented companies, as well as the nation’s life insurers, which keep massive overseas investment portfolios.

As of the end of last month, insurers recorded NT$65.8 billion (US$2.18 billion) in foreign-exchange related losses, the Financial Supervisory Commission said on Tuesday.

In total, foreign-exchange losses for insurers reached about NT$508.8 billion, of which NT$416.9 billion was offset by hedging measures, while NT$26.1 billion was charged against foreign-exchange reserves, the commission said.

Foreign-exchange reserves among insurers have been dwindling rapidly as the NT dollar has picked up about 7 percent since the beginning of this year.

The commission said that nine local insurers have nearly exhausted 80 percent of their reserves and might stop drawing from the remaining 20 percent this month.

As of the end of last month, foreign-exchange reserves had fallen to about NT$18 billion, the lowest since March 2012.

The drastic rise in the NT dollar has eroded earnings at major technology firms, including Taiwan Semiconductor Manufacturing Co (台積電), Largan Precision Co (大立光), Siliconware Precision Industries Co (矽品) and others.

The central bank has refrained from interventions since the US last year placed Taiwan on its currency monitoring list.

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