The nation’s foreign exchange reserves last month shed US$1.3 billion to US$576.677 billion due to a flight of capital, but managed to gain US$6.03 billion for the whole of last year, helped by strong exports, the central bank said yesterday.
The results came after foreign portfolio managers cut net holdings in local shares by more than US$30 billion, contributing to the New Taiwan dollar’s annual 6.42 percent decline against the greenback, Department of Foreign Exchange Director-General Eugene Tsai (蔡炯民) said.
The New Taiwan dollar weakened 0.75 percent against the US dollar last month, relatively stable compared with the Chinese yuan’s 1.09 percent decrease, the euro’s 1.56 percent retreat, the British pound’s 1.28 percent drop and the yen’s 4.05 percent plunge, Tsai said.
Photo: Reuters
Taiwan’s exports have benefited from the boom in artificial intelligence and lent support to the NT dollar, Tsai said, admitting that the central bank intervened several times to slow the local currency’s depreciation in the second half of last year.
Global capital flows to US dollar-denominated assets gained speed in the final quarter of last year after the US economy proved resilient, driving the Federal Reserve to raise its GDP growth and inflation forecasts last month.
US president-elect Donald Trump’s tariff threats on imports also fueled inflation outlook adjustments, Tsai said, adding that financial markets are now looking at only two interest rate cuts by the Fed this year, from four previously.
“The change spurred global fund redeployments,” Tsai said, as global money is in constant pursuit of investments with better returns.
Taiwan remains the world’s fourth-largest holder of foreign exchange reserves after China, Japan and Switzerland, he said.
In related news, the Financial Supervisory Commission yesterday said that foreign institutional investors recorded a net fund inflow of US$5.68 billion last month, reversing a net fund outflow of US$1.297 billion in November.
Foreign institutional investors registered a net fund inflow of US$37.196 billion last year, the highest level since the commission began tallying such flows in 2011.
Last year's figure eclipsed the US$29.478 billion in net fund inflows in 2023, as the TAIEX soared 28.47 percent, the commission said.
With foreign institutional investors investing heavily in big AI-related names last year, the combined market capitalization of chipmaker Taiwan Semiconductor Manufacturing Co (台積電), smartphone IC designer MediaTek Inc (聯發科) and IC packaging and testing services provider ASE Technology Holding Co (日月光投控) rose by more than NT$13 trillion, the commission said.
As a result, foreign institutional investors owned 43.09 percent of the main exchange and over-the-counter (OTC) market at the end of last year, when total market capitalization hit NT$80.40 trillion (US$2.5 trillion), it said.
The 43.09 percent was up from the 38.47 percent seen at the end of 2023, the commission said.
Despite foreign institutional investors' high level of holdings in the market and net fund inflows, they were actually net sellers of NT$682.57 billion (US$21.26 billion) in shares on the main exchange and OTC market, the commission said.
Analysts said the numbers indicated that many foreign institutional investors were keeping funds in Taiwan after cashing out some of their stock holdings, looking for other investment opportunities in the local market.
CHIP RACE: Three years of overbroad export controls drove foreign competitors to pursue their own AI chips, and ‘cost US taxpayers billions of dollars,’ Nvidia said China has figured out the US strategy for allowing it to buy Nvidia Corp’s H200s and is rejecting the artificial intelligence (AI) chip in favor of domestically developed semiconductors, White House AI adviser David Sacks said, citing news reports. US President Donald Trump on Monday said that he would allow shipments of Nvidia’s H200 chips to China, part of an administration effort backed by Sacks to challenge Chinese tech champions such as Huawei Technologies Co (華為) by bringing US competition to their home market. On Friday, Sacks signaled that he was uncertain about whether that approach would work. “They’re rejecting our chips,” Sacks
Taiwan’s exports soared 56 percent year-on-year to an all-time high of US$64.05 billion last month, propelled by surging global demand for artificial intelligence (AI), high-performance computing and cloud service infrastructure, the Ministry of Finance said yesterday. Department of Statistics Director-General Beatrice Tsai (蔡美娜) called the figure an unexpected upside surprise, citing a wave of technology orders from overseas customers alongside the usual year-end shopping season for technology products. Growth is likely to remain strong this month, she said, projecting a 40 percent to 45 percent expansion on an annual basis. The outperformance could prompt the Directorate-General of Budget, Accounting and
NATIONAL SECURITY: Intel’s testing of ACM tools despite US government control ‘highlights egregious gaps in US technology protection policies,’ a former official said Chipmaker Intel Corp has tested chipmaking tools this year from a toolmaker with deep roots in China and two overseas units that were targeted by US sanctions, according to two sources with direct knowledge of the matter. Intel, which fended off calls for its CEO’s resignation from US President Donald Trump in August over his alleged ties to China, got the tools from ACM Research Inc, a Fremont, California-based producer of chipmaking equipment. Two of ACM’s units, based in Shanghai and South Korea, were among a number of firms barred last year from receiving US technology over claims they have
BARRIERS: Gudeng’s chairman said it was unlikely that the US could replicate Taiwan’s science parks in Arizona, given its strict immigration policies and cultural differences Gudeng Precision Industrial Co (家登), which supplies wafer pods to the world’s major semiconductor firms, yesterday said it is in no rush to set up production in the US due to high costs. The company supplies its customers through a warehouse in Arizona jointly operated by TSS Holdings Ltd (德鑫控股), a joint holding of Gudeng and 17 Taiwanese firms in the semiconductor supply chain, including specialty plastic compounds producer Nytex Composites Co (耐特) and automated material handling system supplier Symtek Automation Asia Co (迅得). While the company has long been exploring the feasibility of setting up production in the US to address
RSS