Taiwan forex reserves top US$600 billion mark for 1st time

Taipei, Oct. 7 (CNA) Taiwan's foreign exchange reserves hit a record high at the end of September, surpassing the US$600 billion mark for the first time, the Central Bank of the Republic of China (Taiwan) said Tuesday.

Data released by the central bank showed the country's forex reserves rose US$5.51 billion from a month earlier to reach US$602.94 billion as of the end of September.

The central bank said the record high forex reserves largely reflect an increase in returns from the bank's portfolio management, the movement of other foreign currencies in the portfolio against the U.S. dollar and the bank's efforts to smooth the volatility of the Taiwan dollar.

Speaking with reporters, Tsai Chiung-min (蔡炯民), head of the Foreign Exchange Department, said a rate cut cycle launched by the U.S. Federal Reserve and continued enthusiasm over artificial intelligence development led share prices in Taiwan to new highs and pushed up the Taiwan dollar in some trading sessions.

To stabilize the local forex market, the central bank stepped in to buy greenbacks and sell the Taiwan dollar to slow down the pace of the local currency's appreciation against the greenback, Tsai said.

In September, the Taiex, the weighted index on the Taiwan Stock Exchange, soared 1,587.44 points or 6.55 percent, while the Taiwan dollar appreciated 0.44 percent against the U.S. dollar in the month. Market analysts said without the central bank's intervention, the local currency would have moved higher.

Due to the strong showing of the local stock market and growing market value, foreign investors held US$1.04 trillion in Taiwan-listed stocks, bonds and Taiwan dollar deposits at the end of September, a new high and up from US$951.1 billion in August.

These holdings equaled 172 percent of Taiwan's total forex reserves in September, up from 159 percent in August.

When asked whether Taiwan will use its huge forex reserves as a bargaining chip during tariff talks with the United States in terms of forex rate movement acceptable toy Washington or Taipei's potential investments in the U.S. market, Tsai said the central bank is not part of Taiwan's negotiation team.

"Taiwan's forex reserves and the ongoing tariff talks with the U.S. are two separate issues," Tsai said.

Tsai emphasized the central bank has built a communications channel with the U.S. Treasury department as it comes to its forex policies.

The central bank has said the guidance the U.S. Treasury Department gave in its latest semi-annual currency report in June was consistent with Taiwan's forex policies. In the currency report, Taiwan stayed on the currency watch list with eight other economies -- China, Japan, Korea, Singapore, Vietnam, Germany, Ireland and Switzerland.

Taiwan has built up about NT$3 trillion (US$98.36 billion) in overseas assets, including NT$1.5 trillion in private hands, and enjoys a sizable currency account surplus of more than US$100 billion, the country has no problem in liquidity, Tsai said.

The huge overseas assets held by the private sector can be used for investments abroad, he added.

The central bank also reiterated its commitment to maintaining sufficient foreign reserves to safeguard Taiwan's financial stability and cushion against sudden capital outflows.