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Taiwan records net financial outflow for 29th consecutive quarter

2017/11/21 13:47:55

Taipei, Nov. 21 (CNA) Taiwan recorded a net outflow of funds in the third quarter of the year, marking its 29th straight quarterly outflow and the longest run in its history, according to the central bank.

In a statement on Monday, the central bank said Taiwan registered a net financial outflow of US$16.93 billion in the July to September period, surpassing the US$14.58 billion recorded in the previous quarter.

The central bank's data showed that the latest figure brought the aggregate outflow over the past 29 quarters to US$334.48 billion or about NT$10.07 trillion, topping the NT$10 trillion mark for the first time.

The increase can be attributed to a rise in net portfolio investments held overseas Taiwanese residents, which rose in the third quarter of 2017 by US$22.97 billion from a year earlier, while local insurance firms also raised their securities and bond holdings in foreign markets, the central bank said.

However, as foreign institutional investors cut their local equity holdings in the July to September period, net portfolio investments by non-residents dropped by US$10.31 billion, the central bank said.

The continued outflow of Taiwan's financial accounts has fueled concerns that investors will continue to move funds out of the country and into U.S. dollar denominated assets, particularly as the U.S. Federal Reserve has kicked off an interest rate hike cycle this year and is expected to raise its key interest rates again in December.

In an effort to assuage such concerns, the central bank said Taiwan is one of the few countries in the world to record a long term current account surplus and that in such circumstances, countries tend to register net outflows on their financial accounts.

Other countries with a long term current account surplus and net outflows on their financial accounts include China, Japan, Singapore, South Korea, Germany, Malaysia and Russia, the central bank said.

The current account of a country mainly measures its merchandise and service exports.

The central bank's data showed Taiwan recorded a current account surplus of US$20.51 billion in the third quarter, up US$4.27 billion or 26.3 percent from a year earlier on the back of global demand as the world's economy continued to recover.

As for a trade surplus in merchandise, Taiwan's third-quarter figure rose by US$5.89 billion from the previous quarter to US$22.9 billion, the central bank said.

In the July to September period, Taiwan's travel expenses totaled US$5.037 billion, while it recorded US$2.87 billion in travel income, which resulted in a travel income deficit of about US$2.17 billion, its seventh consecutive quarterly deficit, the bank said.

The increase in travel income reflected the peak overseas travel season for Taiwanese, particularly to Japan, the bank said.

(By Chiu Po-sheng and Frances Huang)
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