Taiwan's forex reserves hit new high

09/06/2019 08:46 PM

Taipei, Sept. 6 (CNA) Taiwan's foreign exchange reserves at the end of August hit a new high, largely on the back of an increase in returns on the central bank's investment portfolio, the bank said Friday.

Data compiled by the central bank showed that the country's forex reserves as of the end of August stood at US$468.17 billion, up US$939 million from a month earlier.

The increase in its investment returns offset the impact resulting from volatility in the equity market during the month, when foreign institutional investors cut their holdings, the bank said.

It was the third consecutive month in which Taiwan's forex reserves hit a new high, the data indicated.

Harry Yen (顏輝煌), head of the bank's Foreign Exchange Department, said the global financial markets, including that of Taiwan, experienced turmoil in August as the United States and China escalated their punitive tariffs against each other's goods.

The trade war sent the Chinese yuan into a tailspin that in turn affected other currencies in the region, Yen said.

In addition, he went on, the controversial extradition bill in Hong Kong had continued to create chaos in the territory since June, which raised concern over the status of the international financial hub and over global financial stability.

The Hong Kong government announced earlier this week to withdraw the bill.

Amid the global financial volatility, the benchmark weighted index on the Taiwan Stock Exchange fell about 1.9 percent and the index of the over-the-counter (OTC) market shed 1.92 percent in August after foreign institutional investors registered a combined net sell of NT$120 billion (US$3.84 billion)-worth of shares on the main board and the OTC market in the month.

The yuan's weakness promoted currency traders to dump other regional currencies, with the Taiwan dollar falling about 1 percent against the U.S. dollar in August.

The central bank data showed that at the end of August, the holdings of Taiwanese stocks, bonds and Taiwan dollar-denominated deposits by foreign investors totaled US$364.4 billion, down from US$376.8 billion at the end of July.

As a result, foreign-held assets at the end of August were equal to about 78 percent of Taiwan's foreign exchange reserves, down from 81 percent at the end of July, central bank data showed.

Asked whether the central bank intervened in the foreign exchange market to prevent the local currency from falling further, Yen just said the central bank always respects the market mechanism and only in case of overly volatile fluctuations will it enter the market to maintain order.

The central bank has said it is committed to maintaining ample forex reserves by improving investment returns to guarantee secure financial markets at home, even if foreign institutional investors move funds out of the country.

(By Pan Tzu-yu and Frances Huang)


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