Taiwan’s foreign exchange reserves last month picked up US$3.8 billion to US$548.5 billion, ending two months of decline, thanks to seasonal dividend income from bond holdings and value gains in non-US dollar reserve currencies, the central bank said yesterday.
The latest balance indicated that Taiwan retained its status as the world’s fourth-largest foreign reserve holder after China, Japan and Switzerland, after overtaking India in April.
“The central bank’s holdings in US government bonds received a boost from seasonal dividend incomes and value advances in major reserve currencies other than the greenback,” Department of Foreign Exchange Director-General Eugene Tsai (蔡炯民) told a news conference in Taipei.
Photo: CNA
The euro last month rose 2.27 percent against its US counterpart, while the British pound increased 1.07 percent and the Japanese yen grew 1.99 percent, Tsai said.
The central bank intervened in the local foreign exchange market to maintain stability in the local currency and achieved a neutral effect due to the moderate amount involved, he said.
The local foreign exchange market was volatile last month, with many wondering how far the US dollar’s appreciation would go, Tsai said, adding that the greenback weakened in the second half of the month after economic uncertainty loomed, raising hope that the US Federal Reserve would ease monetary tightening.
Such expectations lent support to emerging market currencies including the New Taiwan dollar, he said.
That explains why foreign stock players modestly increased holdings in local shares, but pressed ahead with net capital flight of US$1 billion to pursue higher yields elsewhere, he added.
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