The nation’s foreign exchange reserves last month increased by US$109 million to US$548.96 billion, rising for the second straight month, as demand for the local currency from exporters muted sell-off by foreign portfolio managers, the central bank said yesterday.
Financial Supervisory Commission (FSC) data showed US$2.54 billion in fund outflows last month, but the central bank observed a larger capital flight of US$5.19 billion after including capital gains, Department of Foreign Exchange Director-General Eugene Tsai (蔡炯民) told an online news conference in Taipei.
The pace did show signs of slowing last month, compared with March to May, Tsai said.
Photo: Chen Mei-ying, Taipei Times
Fund outfows so far this year totaled US$26 billion, he said.
Last month’s fund outflows were the highest in June over the past nine years, after foreign investors sold a net NT$211.4 billion of local shares, the FSC said.
The discrepancy between fund outflows and share sales showed that some foreign investors had not transferred funds abroad as they were looking for other investment targets, it said.
For the first half of this year, cumulative net fund outflows from foreign investors totaled US$6.16 billion, compared with a net fund inflow of US$10.91 billion a year earlier, FSC data showed.
During the same period, foreign investors sold a net NT$853 billion of shares on the main board and a net NT$41.5 billion of shares on the over-the-counter market, the data showed.
The capital movements came after the US Federal Reserve indicated that it would hike interest rates for a third time by another 0.75 percentage points this month to fight inflation.
That explained why major currencies lost value against the greenback, with the euro weakening 2.79 percent, the British pound shedding 3.87 percent, the Japanese yen softening 6.22 percent and the Australian dollar depreciating 4.11 percent, Tsai said.
At the same time, local bonds and savings deposits held by foreign investors dropped to 96 percent of Taiwan’s foreign exchange reserves, from 110 percent in previous months, Tsai said.
Value losses accounted for the difference, he added.
The TAIEX tumbled 11 percent last month, but the New Taiwan dollar slid only 2 percent against the US dollar, supported by demand from exporters needing cash for dividend payouts, he said.
The months of June, July and August are the high season for cash dividend payouts, the central bank said.
Tsai said the central bank intervened in the foreign exchange market a few times to stabilize the local currency, but the volume involved was small because the NT dollar was relatively stable.
Taiwan remained the world’s fourth-largest foreign exchange reserve holder after China, Japan and Switzerland, the central bank said.
Additional reporting by Kao Shih-ching
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