The nation’s foreign exchange reserves last month slid by US$206 million to US$543.08 billion, as foreign portfolio investors trimmed their holdings of local shares and repatriated cash dividends distributed by major local technology firms, the central bank said.
The latest figure put an end to three consecutive months of gains amid a stable US dollar and a weaker euro, while the Chinese yuan, the Japanese yen and British pound strengthened, Department of Foreign Exchange Director-General Eugene Tsai (蔡炯民) told an online news conference on Thursday.
The TAIEX shed 2 percent last month, as unease built up across global bourses over the more contagious Delta variant of SARS-CoV-2 in the US, Europe and Asia, propeling US$6.02 billion of foreign funds to flee Taiwan.
Capital fund outflows received a boost from investment gains and cash dividend payouts by chipmaker Taiwan Semiconductor Manufacturing Co (台積電) and chip designer MediaTek Inc (聯發科), the central bank said.
The central bank did not comment on whether capital outflows would persist this month, when more tech and non-tech companies are due to distribute cash dividends.
The change in foreign exchange reserves was insignificant and Taiwan’s foreign exchange holdings still ranked fifth worldwide, after China, Japan, Switzerland and India, Tsai said.
“The foreign exchange market remained stable,” Tsai said, adding that local insurance companies contributed to capital outflows as they tried to pursue better returns in overseas markets.
Taiwanese exporters, on the other hand, lent support to the New Taiwan dollar as they converted large amounts of their export earnings into the local currency, he said.
As of last month, foreign institutional investors still held US$698.3 billion of local securities and bonds, equivalent to 129 percent of the nation’s foreign exchange reserves, Tsai said.
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