The nation’s foreign exchange reserves last month grew US$1.66 billion to a new high of US$566.49 billion, helped by value gains in major reserve currencies other than the US dollar, the central bank said yesterday.
It was the ninth consecutive month foreign exchange reserves increased, even though the New Taiwan dollar lost 1.04 percent against the greenback after foreign portfolio managers cut their holdings in local shares and wired cash dividends to their home nations, Department of Foreign Exchange Director-General Eugene Tsai (蔡炯民) told a news conference.
“The depreciation remained within a normal range and the central bank stayed mostly on the sidelines as it failed to detect an imbalance between supply and demand,” Tsai said, adding that the local currency’s value has been virtually flat so far this year.
The currency movements were due to the dividend season last month and this month, Tsai said, adding that foreign institutional investors wired about US$7 billion abroad last month.
Some investors chose to channel their cash dividends back into the local bourse on expectations of future gains, while others directed the funds to other investment tools to pursue of better returns, he said.
The US Federal Reserve has raised its policy rate above the 5 percent mark, making US dollar-denominated assets attractive, analysts have said.
Tsai said US government bonds remain the safest asset with the best liquidity, despite the US’ credit rating being downgraded by Fitch Ratings.
The downgrade would have little impact on the central bank’s asset allocation, as it would buy US government debt to better utilize the nation’s foreign exchange reserves, Tsai said.
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