Taiwan's forex reserves hit another new high

Taipei, Nov. 6 (CNA) Taiwan's foreign exchange reserves hit another record high at the end of October, helped by higher returns on its reserve portfolio and a weaker U.S. dollar that made its non-dollar assets more valuable in dollar terms.

Taiwan's forex reserves increased for the third consecutive month to US$546.70 billion as of the end of October, up US$1.802 billion from a month earlier, according to data reported by the Central Bank of the Republic of China (Taiwan).

That meant Taiwan still had the fifth largest forex reserves in the world after China (US$3.2 trillion in September), Japan (US$1.28 trillion in September), Switzerland (US$1.004 trillion in September) and India (US$577.1 billion in October).

Tsai Chiung-min (蔡炯民), head of the bank's Foreign Exchange Department, said the weakness of the U.S. dollar index, which tracks the currencies of the United States' six major trading partners, drove the increase in Taiwan's forex reserves in October.

According to the central bank, the U.S. dollar index fell 0.93 percent last month.

The Canadian dollar, British pound, Swiss franc, Chinese yuan and euro rose 3.12 percent, 2.52 percent, 2.37 percent, 1.33 percent and 0.62 percent, respectively, against the U.S. dollar in October, while the Japanese yen fell 1.49 percent against the greenback.

Tsai said the U.S. dollar is expected to turn stronger as the U.S. Federal Reserve considers raising interest rates starting in mid-2022 after beginning to downsize its asset purchases this month.

Meanwhile, as of the end of October, the value of foreign investor holdings in Taiwan stocks and bonds and Taiwan dollar-denominated deposits totaled US$698.7 billion, up from US$691.3 billion a month earlier, the central bank said.

Those holdings represented 128 percent of Taiwan's total foreign exchange reserves as of the end of September, up one percentage point from the previous month, the central bank added.

Tsai said the holdings by foreign investors stayed little changed as Taiwan's stock market rose 0.31 percent in October.

Foreign institutional investors were net sellers of NT$186 million in shares during the month, but when cash dividends they remitted out of Taiwan are included, the net sell increased to NT$5.43 billion.

The central bank has said it will maintain ample forex reserves to ensure that domestic financial markets remain stable and guard against any sudden withdrawal of funds out of the country by foreign institutional investors.