Taiwan’s foreign exchange reserves slipped to US$600.197 billion at the end of last month, down US$2.746 billion from a month earlier, as the New Taiwan dollar weakened and the central bank intervened to stabilize the local currency, the central bank said yesterday.
The decline mainly reflected the depreciation of major global currencies against the US dollar and the monetary authority’s US dollar sales to support the local currency, Department of Foreign Exchange Director-General Eugene Tsai (蔡烱民) told an online news briefing.
Demand for the greenback rose amid renewed concerns over China’s rare earth export controls and escalating US-China tariff tensions, he said.
Photo: Reuters
The NT dollar fell 0.74 percent against the US dollar, prompting the central bank to step in to smooth volatility, Tsai added.
Foreign investors sold a net NT$70 billion to NT$80 billion (US$2.26 billion to US$2.58 billion) of local shares during the month, while dividend payouts from major listed firms — including Taiwan Semiconductor Manufacturing Co (台積電) — also contributed to capital outflows.
Total foreign fund outflows reached roughly US$5 billion, Tsai said.
He rejected media speculation that the monetary authority had intentionally allowed the NT dollar to weaken to help exporters, stressing that the bank follows a policy of “symmetric intervention” and only acts when market imbalances appear.
Taiwan is expected to remain on the US Department of the Treasury’s currency monitoring list in its upcoming semi-annual report, Tsai said.
The recent sell-off in local stocks reflects concerns that the US Federal Reserve might not cut interest rates next month, as a US government shutdown has complicated access to key economic data needed to guide policy expectations, he said.
Despite the outflows, foreign investors’ combined holdings of domestic equities, bonds and NT dollar-denominated deposits hit a record US$1.15 trillion last month — equivalent to 192 percent of Taiwan’s foreign exchange reserves — buoyed by earlier stock market gains, Tsai added.
The recent capital outflows appeared to reflect normal market activity, Tsai said, adding that he has not detected any irregularity.
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