Taiwan's forex reserves fall below US$600 billion on market intervention

Taipei, Dec. 6 (CNA) Taiwan's foreign exchange reserves at the end of November fell below the US$600 billion mark as the local central bank stepped in to sell the U.S. dollar to prevent the greenback from appreciating further against the Taiwanese dollar.

Data released by the central bank showed on Friday that the country's forex reserve as of the end of November fell US$406 million from a month earlier to US$599.79 billion, marking the second consecutive month that forex reserves moved lower.

Speaking with reporters, Tsai Chiung-min (蔡炯民), head of the Foreign Exchange Department, said November was a traditional peak cash dividend payment month as many foreign institutional investors rushed to send their funds out of Taiwan, placing the Taiwan dollar under pressure.

According to Tsai, foreign institutional investors remitted about US$11 billion in funds out of Taiwan, including cash dividends and earnings they received, the highest amount in eight months.

At the end of September, Taiwan's forex reserves hit a new high of NT$602.94 billion, marking the first time it stood above the US$600 billion level as the central bank entered the currency market to buy the U.S. dollar to prevent the Taiwan dollar from rising too fast.

In October and November, however, the market conditions changed as a weakening Taiwan dollar forced the central bank to intervene in the currency market by selling the greenback, sending the country's forex reserves lower.

The central bank's data showed foreign investors held US$1.09 trillion in Taiwan-listed stocks, bonds, and Taiwan dollar deposits at the end of November, down from a record high of US$1.15 trillion in October.

These holdings equaled 182 percent of Taiwan's total forex reserves in November, down from 192 percent in October, due to the weakness in the local stock market, where the Taiwan Stock Exchange's benchmark Taiex fell 2.15 percent.

Meanwhile, the central bank announced it will release its first quarterly market intervention data in January for its third quarter intervention.

In the past, the central bank released such data every six months, but in mid-November, it said after consulting with the U.S. Treasury that it has committed to releasing the data on a quarterly basis, in January, April, July, and November to strengthen market transparency.