Taiwan's forex reserves top US$600 billion amid market intervention

Taipei, May 6 (CNA) Taiwan's foreign exchange reserves at the end of April returned to growth, topping US$600 billion once again, as the central bank stepped in to prevent the Taiwan dollar from rising against the U.S. dollar too rapidly, according to the bank.

Data compiled by the central bank showed Wednesday that the country's forex reserves stood at US$602.49 billion as of the end of April, up about US$5.60 billion from US$596.89 billion a month earlier.

Tsai Chiung-min (蔡炯民), head of the Foreign Exchange Department, told reporters that the local market continued to steam ahead, prompting foreign institutional investors to move funds into Taiwan and placing downward pressure on the U.S. dollar in April.

To smooth volatility in the forex market, Tsai said, the central bank intervened by buying the U.S. dollar to cap the Taiwan dollar's appreciation, which boosted the value of forex reserves.

In April, the Taiwan dollar soared 1.05 percent against the U.S. dollar.

Due to a weaker U.S. dollar, when non-greenback denominated assets in its portfolio were converted into the American currency, the value of forex reserves increased accordingly, Tsai said.

Among the major non-greenback currencies, the British pound appreciated against the U.S. dollar by 2.08 percent and the euro rose 1.72 percent, according to the central bank.

Higher returns from the central bank's portfolio management also contributed to the growth in forex reserves in April, Tsai said.

Meanwhile, the central bank data showed foreign investors held US$1.61 trillion in Taiwan-listed stocks, bonds and Taiwan dollar deposits at the end of April, up from US$1.26 trillion in March.

These holdings were the equivalent of 268 percent of Taiwan's total forex reserves in April after the local main board saw the Taiwan Stock Exchange's benchmark Taiex soar 22.71 percent, led by large-cap tech stocks on optimism toward AI development.

Statistics from the Financial Supervisory Commission showed that foreign institutional investors recorded a monthly high of US$26.4 billion in net fund inflows into Taiwan in April.

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