Taiwan’s foreign exchange reserves last month declined by US$1.56 billion to US$571.74 billion, ending two months of gains, due to an outflow of foreign capital, the central bank said yesterday.
The retreat also had to do with the monetary policymaker’s intervention in the foreign exchange market, which was aimed at slowing the local currency’s depreciation against the US dollar, Department of Foreign Exchange Director-General Eugene Tsai (蔡炯民) told an online news conference.
The New Taiwan dollar lost 1.13 percent against the greenback as foreign portfolio managers wired cash dividends and capital gains abroad, Tsai said.
Photo: CNA
Foreign stock players collected US$4 billion to US$5 billion in cash dividends and an unspecified amount of capital gains from the local bourse, which repeatedly rallied to record highs in the first half of last month, he said.
Capital outflows totaled US$12 billion, Tsai added.
Major reserve currencies also devalued against the US dollar: the Euro dropped 1.21 percent, the Canadian dollar declined 0.9 percent and the Australian dollar decreased 1.96 percent, Tsai said.
Japan’s yen and China’s yuan bucked the downturn, advancing 4.76 percent and 0.68 percent respectively, Tsai said.
Taiwan ranked the world’s fifth largest holder of foreign reserves after China, Japan, Switzerland and India, he said.
The NT dollar’s momentum is likely shifting, as the US Federal Reserve (Fed) is widely expected to lower interest rates next month, after the US economy recently showed signs of weakness and inflation has become muted, Tsai said.
Moving forward, the Fed would assign more importance to economic health after the latest US employment data disappointed and corporate earnings produced mixed results, Tsai said, adding that a hard landing is unlikely for the US economy.
The US presidential election poses further uncertainty, he added.
The NT dollar yesterday rose 0.5 percent, or NT$0.178, against the greenback, although the TAIEX plunged by an unprecedented 8.35 percent, or 1,807.21 points, to 19,830.88.
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