The nation’s financial holding companies reported record-high unrealized losses of NT$873.2 billion (US$28.66 billion) during the second quarter, as the value of their investment assets plunged amid market routs sparked by the US Federal Reserve’s cycle of rate hikes, data from the Financial Supervisory Commission (FSC) showed on Monday.
Combined unrealized losses in the first half of this year came in at NT$827.76 billion — NT$661 billion from overseas investments and NT$166 billion from domestic investments, the data showed.
The majority of their losses came from investments in the US, which totaled NT$256.5 billion at the end of June, compared with unrealized losses of NT$38.4 billion at the end of March, the data showed.
Photo: Kelson Wang, Taipei Times
Financial holding companies’ investments in the US increased by NT$503 billion in the second quarter, mainly because local life insurance companies bought more US fixed-income products, the data showed.
China was the second biggest source of losses, with the financial holding firms reporting aggregate losses of NT$53.1 billion, followed by France with losses of NT$31.7 billion, Russia with losses of NT$31.4 billion and Mexico with losses of NT$27.5 billion, the data showed.
The companies also boosted their investments slightly in France, Russia and Mexico, but cut their investments in China by NT$88 billion during the second quarter, the data showed.
Overall, financial holding companies’ overseas exposure totaled NT$23.95 trillion at the end of June, up about 3 percent from the previous quarter, the 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 Financial Supervisory Commission (FSC) yesterday met with some of the nation’s largest insurance companies as a skyrocketing New Taiwan dollar piles pressure on their hundreds of billions of dollars in US bond investments. The commission has asked some life insurance firms, among the biggest Asian holders of US debt, to discuss how the rapidly strengthening NT dollar has impacted their operations, people familiar with the matter said. The meeting took place as the NT dollar jumped as much as 5 percent yesterday, its biggest intraday gain in more than three decades. The local currency surged as exporters rushed to
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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