The nation’s balance of payments last quarter reported a drop of US$4.12 billion in reserve assets, the first retreat since Europe’s debt woes in 2011, as the central bank poured money into the foreign exchange market to slow the local currency’s depreciation.
Other Asian central banks made the same move and incurred even heavier losses, the central bank said, adding that peers in South Korea, Japan and Singapore also intervened in response to massive capital outflows from Asia to take refuge in the US dollar.
The balance of payments sum up all transactions made with foreign entities by individuals, companies and government bodies in an economy. The figure is commonly used as a reference for monetary policymaking.
Photo: CNA
The central bank said it had no choice but to act to keep the New Taiwan dollar relatively stable, adding that Japan saw its reserve assets from July to September tumble by US$14.4 billion.
It is common for global portfolio managers to send capital and cash dividends abroad, and stay on the sidelines during a financial tumult, the central bank said.
Taiwan’s economy has fared well thus far, although global monetary tightening has cooled demand for consumer discretionary spending, the central bank said.
The current account booked a surplus of US$20.71 billion as global demand for Taiwan-made chips remained strong, even though the surplus shrank by US$6.14 billion from a year earlier due to inventory correction, it said.
Faster imports induced by energy and raw material price gains also weighed on the current account, the central bank added.
The service account posted a surplus of US$3.75 billion, widening by US$500 million from a year earlier, as Taiwan eased COVID-19 restrictions, the central bank said.
In the first three quarters, Taiwan accumulated a current account surplus of US$75.03 billion, while its reserve assets decreased by US$50 million due to measures to support the local currency.
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