Taiwan’s foreign exchange reserves hit a new high for the fourth consecutive month at the end of November on the back of an increase in returns from the management of its reserve portfolio, according to the central bank.
Data compiled by the central bank showed forex reserves as of the end of November totaled US$547.33 billion, up US$631 million from a month earlier after the bank continued its efforts to effectively manage the investment portfolio.
However, a stronger U.S. dollar offset the benefits from the higher investment returns as non-greenback denominated assets were converted into U.S. dollar terms, said Tsai Chiung-min (???), head of the bank’s Foreign Exchange Department.
According to Tsai, the U.S. dollar index, which tracks the currencies of the United States’ six major trading partners, rose almost 2 percent in November.
On the other hand, Tsai said the Australian dollar, the British pound, the euro, the Canadian dollar, and the Swiss franc lost 5.3 percent, 3.43 percent, 3.22 percent, 3 percent, and 1.2 percent, respectively, against the greenback last month. Bucking the downturn, the Chinese yuan rose 0.18 percent against the U.S. dollar.
Foreign institutional investors moved about US$6 billion in gains out of Taiwan in November, but others still moved funds into the country, said Tsai.
“Despite a small net fund outflow registered in November, supply and demand in the local forex market still tilted toward a balance,” he said.
After an increase in its November forex reserves figure, Taiwan still had the fifth-largest forex reserves in the world after China (US$3.32 trillion at end of October), Japan (US$1.28 trillion at end of October), Switzerland (US$1.01 trillion at end of October) and India (US$574.7 billion as of Nov. 26).
In addition, South Korea, which is a major competitor of Taiwan in the global market, reported US$439.1 billion in forex reserves at the end of November.
As of the end of November, the value of foreign investor holdings in Taiwan stocks and bonds and Taiwan dollar-denominated deposits totaled US$718.2 billion, up from US$698.7 billion a month earlier, the central bank said.
Those holdings represented 131 percent of Taiwan’s total foreign exchange reserves as of the end of November, up three percentage points from the previous month, the central bank added.
Tsai said the increase largely reflected the gains posted by the local equity market. In November, the Taiex, the weighted index on the Taiwan Stock Exchange, rose by 440.35 points, or 2.59 percent.
The central bank has said it would 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.
Source: Focus Taiwan News Channel