Taiwan’s foreign exchange reserves rose from a year earlier for the second consecutive month in June, reflecting the fluctuations of other reserve currencies in the central bank’s portfolio against the U.S. dollar, according to the bank.

The central bank said the growth in forex reserves also resulted from an increase in returns from the bank’s managed portfolio.

Data compiled by the central bank showed the country’s forex reserves at the end of June stood at US$548.96 billion, up US$109 million from a month earlier.

Taiwan remained the fourth-largest holder of forex reserves in the world after China (US$3.1 trillion), Japan (US$1.2 trillion), and Switzerland (US$964.7 billion), according to the central bank.

The central bank said as the U.S. dollar index, which gauges the greenback’s value against the currencies of Washington’s major trading partners, rose by 3.05 percent in June, the major currencies weakened against the greenback, said Tsai Chiung-min (???), head of the central bank’s Foreign Exchange Department.

In June, the Singapore dollar depreciated by 1.59 percent against the U.S. dollar, the Canadian dollar decreased by 1.67 percent, the euro fell by 2.79 percent, the British pound weakened by 3.87 percent, the Australia dollar dropped by 4.11 percent, and the Japanese yen plunged by 6.22 percent.

The Taiwan dollar also depreciated by 2.2 percent against the U.S. dollar in June, while the Chinese yuan bucked the downturn, rising by 0.31 percent against the greenback.

To assuage the volatility of the Taiwan dollar in June, Tsai said the central bank jumped into the market to sell U.S. dollars while making purchases of the local currency during the month. However, the value of the central bank’s intervention was limited, he added.

At the end of June, the value of foreign investor asset holdings of Taiwan-listed stocks and bonds and Taiwan dollar-denominated deposits fell by US$99.7 billion from the end of May to US$529.3 billion in the wake of a plunge in the local stock market.

Those holdings represented 96 percent of Taiwan’s total foreign exchange reserves as of the end of June, also down from 115 percent at the end of May, the central bank added.

In June, the Taiex, the weighted index on the Taiwan Stock Exchange (TWSE), tumbled by 1,982.04 points or 11.79 percent as the market capitalization of the main board shrank by NT$5.93 trillion (US$199 billion).

The central bank has said it will maintain ample forex reserves to ensure that domestic financial markets remain stable, as well as to guard against any sudden withdrawal of funds from the country by foreign institutional investors.

Source: Focus Taiwan News Channel