Taiwan’s foreign exchange reserves last month increased by US$1.85 billion from January, to a new record of US$543.33 billion, despite a slower growth from the previous three months, when the reserves increased by US$11.57 billion, US$16.51 billion and US$12.16 billion respectively, the central bank said on Friday.
Department of Foreign Exchange Director-General Tsai Chiung-min (蔡炯民) said that the slower increase was due to balanced supply and demand in the local foreign exchange market.
The central bank in the past few months took measures to slow the appreciation of the New Taiwan dollar against the US dollar, including buying the US currency, which boosted Taiwan’s foreign exchange reserves.
Photo: Bloomberg
Tsai did not comment on whether the central bank last month increased its US dollar buying, but said that Taiwan recorded a net fund outflow of about US$20 million last month, citing Financial Supervisory Commission (FSC) data.
This indicated a supply-demand balance in the market as investors adjusted their portfolios, he said.
The increase in foreign exchange reserves was in part also due to higher returns from the bank’s investments, it said.
Other currencies in its investment portfolio appreciated against the US dollar, the central bank said.
Last month, the euro rose 0.5 percent against the greenback, the pound rose 2.07 percent, the Canadian dollar rose 2.13 percent, and the Australian dollar rose 2.72 percent, leading to a higher value of central bank reserves in those currencies in US dollar terms, the central bank said.
The value of foreign investor holdings in Taiwanese stocks, bonds and NT dollar-denominated deposits was US$670.3 billion last month, up US$24.6 billion from January, due to a strong local equity market, reflected in the TAIEX’s rise of 5.39 percent, it said.
Foreign investor holdings were equal to 123 percent of the central bank’s foreign exchange reserves, up from 119 percent in January, posting a new record, data showed.
The US dollar was trading at NT$29.7 at 10am today on the Taipei Foreign Exchange, as the New Taiwan dollar gained NT$1.364 from the previous close last week. The NT dollar continued to rise today, after surging 3.07 percent on Friday. After opening at NT$30.91, the NT dollar gained more than NT$1 in just 15 minutes, briefly passing the NT$30 mark. Before the US Department of the Treasury's semi-annual currency report came out, expectations that the NT dollar would keep rising were already building. The NT dollar on Friday closed at NT$31.064, up by NT$0.953 — a 3.07 percent single-day gain. Today,
‘SHORT TERM’: The local currency would likely remain strong in the near term, driven by anticipated US trade pressure, capital inflows and expectations of a US Fed rate cut The US dollar is expected to fall below NT$30 in the near term, as traders anticipate increased pressure from Washington for Taiwan to allow the New Taiwan dollar to appreciate, Cathay United Bank (國泰世華銀行) chief economist Lin Chi-chao (林啟超) said. Following a sharp drop in the greenback against the NT dollar on Friday, Lin told the Central News Agency that the local currency is likely to remain strong in the short term, driven in part by market psychology surrounding anticipated US policy pressure. On Friday, the US dollar fell NT$0.953, or 3.07 percent, closing at NT$31.064 — its lowest level since Jan.
The New Taiwan dollar and Taiwanese stocks surged on signs that trade tensions between the world’s top two economies might start easing and as US tech earnings boosted the outlook of the nation’s semiconductor exports. The NT dollar strengthened as much as 3.8 percent versus the US dollar to 30.815, the biggest intraday gain since January 2011, closing at NT$31.064. The benchmark TAIEX jumped 2.73 percent to outperform the region’s equity gauges. Outlook for global trade improved after China said it is assessing possible trade talks with the US, providing a boost for the nation’s currency and shares. As the NT dollar
PRESSURE EXPECTED: The appreciation of the NT dollar reflected expectations that Washington would press Taiwan to boost its currency against the US dollar, dealers said Taiwan’s export-oriented semiconductor and auto part manufacturers are expecting their margins to be affected by large foreign exchange losses as the New Taiwan dollar continued to appreciate sharply against the US dollar yesterday. Among major semiconductor manufacturers, ASE Technology Holding Co (日月光), the world’s largest integrated circuit (IC) packaging and testing services provider, said that whenever the NT dollar rises NT$1 against the greenback, its gross margin is cut by about 1.5 percent. The NT dollar traded as strong as NT$29.59 per US dollar before trimming gains to close NT$0.919, or 2.96 percent, higher at NT$30.145 yesterday in Taipei trading
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