Taiwan’s foreign exchange reserves rose to a record high at the end of August, on increased returns from the central bank’s portfolio management, according to the bank.
Central bank data released on Monday showed the country’s total forex reserves at US$543.58 billion as of the end of August, up US$502 million from a month earlier.
The U.S. dollar index, which tracks the greenback value against the six other currencies of Washington’s major trading partners, rose 0.5 percent in August when the non-U.S. dollar assets were converted into U.S. dollar terms, and the value of those assets in Taiwan’s forex reserves fell accordingly, said Tsai Chiung-min (???), head of the bank’s Foreign Exchange Department.
The central bank’s management of its portfolio, however, brought increased returns, which boosted Taiwan’s forex in August despite the effects of a stronger U.S. dollar, Tsai said.
With the increase in August, Taiwan cemented its place as the fifth largest forex reserve holder in the world, after China with US$3.24 trillion in July, Japan (US$1.30 trillion in July), Switzerland (US$1.02 trillion in July), and India (US$571.6 billion in August), the central bank said.
Meanwhile, as of the end of August, the value of foreign investor holdings in Taiwan stocks and bonds and Taiwan dollar-denominated deposits was US$719.7 billion, up from US$698.30 billion a month earlier, the bank said.
Those holdings represented 132 percent of Taiwan’s total foreign exchange reserves as of the end of August, up 3 percentage points from the previous month, the central bank data showed.
Tsai said the recovery of the local main board in late August from its losses earlier in the month helped drive up the value of assets held by foreign institutional investors.
In August, the weighted index on the Taiwan Stock Exchange rose 242.88 points, or 1.41 percent, from July.
In addition, foreign institutional investors recorded a net fund inflow of US$489.7 billion in August, stopping a net outflow for the second consecutive month, according to the Financial Supervisory Commission.
The central bank has said it will maintain ample forex reserves to keep domestic financial markets stable and guard against any sudden movement of funds out of the country by foreign institutional investors.
Source: Focus Taiwan News Channel