Taiwan’s foreign exchange reserves rose US$2.76 billion from a month earlier to hit US$602.55 billion at the end of last month, second only to US$602.94 billion recorded at the end of September, the central bank said yesterday.
Department of Foreign Exchange Director-General Eugene Tsai (蔡烱民) said as the US dollar index fell 1.14 percent last month, other major non-greenback currencies rose, boosting the central bank’s portfolio when the amount was converted into the US currency.
Although the central bank stepped into the market to ease the volatility of the New Taiwan dollar last month, the intervention was limited, failing to impact the month’s forex reserves, Tsai said.
Photo: Cho Seong-joon, Bloomberg
In May and June, the central bank bought the greenback to cap the appreciation of the NT dollar, giving a boost to the country’s forex reserves.
In the following months, despite a stable local currency, forex reserves continued to grow due to an increase of returns from the central bank’s portfolio managements with the September figure hitting a fresh high.
However, forex reserves moved lower in October and November as many foreign institutional investors rushed to move their funds out of Taiwan, placing the NT dollar under pressure.
In recent trading sessions, foreign institutional investors did not remit large funds out of or into the local market, Tsai said.
However, he cautioned that contract chipmaker Taiwan Semiconductor Manufacturing Co (台積電) is slated to pay large cash dividends tomorrow, if foreign investors move their cash dividend payouts out of Taiwan, instead of investing the money in the local stock market, the local forex market will be affected, he added.
The central bank’s data showed foreign institutional investors held US$1.15 trillion in Taiwan-listed stocks, bonds and NT dollar-denominated deposits at the end of last month, up from US$1.09 billion in November.
These holdings were the equivalent of 191 percent of Taiwan’s total forex reserves last month, up from 182 percent in November after the benchmark TAIEX rose 4.84 percent.
The central bank yesterday disclosed that it bought US$1.287 billion more US dollars than it sold in the third quarter of last year.
In the past, the central bank made the figure public every six months, but as the bank has reached an agreement with the US Department of the Treasury to detail the amount of market intervention every quarter, it from this year would disclose the figure in January, April, July and October, to boost market transparency.
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