Taiwan’s accounts last quarter registered a US$29.11 billion surplus on the back of improving exports, but capital outflows grew by US$29.19 billion, leaving the balance of payments (BOP) at a deficit of US$330 million, the central bank said yesterday.
It is the first BOP deficit since the third quarter of 2022, the central bank said, adding that its effort to slow the local currency’s depreciation against the US dollar contributed to the deficit.
The central bank said there is no need to worry about the difference between the capital outflows and current account surplus because it is quite small.
Photo: Ann Wang, Reuters
The rapid capital outflows also had to do with active purchases of US government and corporate bonds by local banks, life insurers and individuals on expectation that the US Federal Reserve (Fed) would cut interest rates later this year.
Interest rate cuts would boost bond prices.
The Fed has said it would cut rates when it is confident enough that inflation is headed toward its 2 percent target.
The US consumer price index last month grew 3.4 percent from a year earlier, but the Fed said it would not be considering interest rate hikes.
It is common for countries with current account surpluses to see capital outflows, because financial institutions need to digest idle funds and pursue returns, the central bank said.
Capital outflows also happen in Japan, Germany, Singapore and South Korea, the central bank added.
The high interest rates in the US make its government and corporate bonds safe and attractive investment targets, and the US dollar has benefited from global fund deployment, the central bank said.
At the same time, the deficit in the services account widened from US$2.17 billion to US$2.54 billion, as outbound travel increased and inbound tourist arrivals continued to leave much to be desired, the central bank added.
The number of Japanese tourists, for instance, have not returned to pre-COVID-19 pandemic levels, given the weakening of the yen, which makes overseas travel expensive for the Japanese, local hotels have said.
DISAGREEMENT: German Chancellor Olaf Scholz has spoken out against the tariffs, as it would affect his country’s auto industry, which benefits from business in China Volvo Car AB has started to shift manufacturing of Chinese-made electric vehicles (EVs) to Belgium as the EU prepares to impose tariffs on China-made EVs, the Times reported. On top of transferring production of Volvo’s EX30 and EX90 models to Belgium, the automaker might also move assembly of some Volvo models bound for the UK, the report said, citing unidentified people. Volvo, which is owned by Zhejiang Geely Holding Group Co (吉利控股集團), is seen as the most exposed among western automakers to the potential tariffs, the Times said. Trade frictions between the EU and China have led to a barrage of anti-dumping probes
In a middle-class suburb of Mumbai, workers at Softbank Group Corp-backed Swiggy’s grocery warehouse race against time to deliver orders within 10 minutes. Their speed is tracked by the seconds on a screen that flashes red warnings if they are going too slow. Outside in the sweltering heat, Swiggy’s bikers, sporting the firm’s trademark bright orange T-shirt, frantically collect packed grocery orders to deliver them nearby, while others return to tackle another shipment assigned on their app and waiting. “Ideally, one needs to get done with the entire [pickup] process in 1 minute, 30 seconds,” Swiggy warehouse manager Prateek Salunke said. Swiggy warehouses
European Semiconductor Manufacturing Co (ESMC), a subsidiary of contract chipmaker Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), will hire almost 2,000, from Germany and other European countries, ESMC president Christian Koitzsch said on Monday. At the Taiwan-Europe semiconductor cooperation forum in Berlin, Koitzsch said ESMC would utilize TSMC’s advanced technologies, talent in Europe and good work ethic in Germany to build a world-class talent pool for the semiconductor industry. In August last year, TSMC announced it would team up with Robert Bosch GmbH, Infineon Technologies AG and NXP Semiconductors NV to set up ESMC, in which the Taiwanese partner would hold a
Amazon Web Services (AWS) is planning to invest billions of dollars over the next 15 years to build data centers in Taiwan and create an infrastructure region in the country by early next year, the Amazon.com Inc cloud computing subsidiary said yesterday. The new “AWS Asia Pacific (Taipei) Region” aims to help customers and AWS partners in Taiwan store their content securely and run cloud-enabled workloads with lower latency from data centers in Taiwan, the company said. The project reflects AWS’ long-term commitment to Taiwan and the Asia-Pacific region amid growing demand for cloud services, it said. The move comes as Taiwan has