Forex reserves rise to US$544.9bn

• By Crystal Hsu / Staff reporter

Taiwan’s foreign exchange reserves last month totaled US$544.9 billion, rising US$1.32 billion from August to a record for the second straight month, the central bank said yesterday, crediting foreign-exchange management.

Department of Foreign Exchange Director-General Eugene Tsai (蔡炯民) said that the US dollar gained 1.73 percent last month, allowing the bank’s investment gains to more than absorb unfavorable exchange twists.

A US Federal Reserve plan to taper its bond purchasing program, with some Fed members suggesting a full exit by March next year, has lent support to US government bonds, as shown by an upswing in 10-year bond yields, Tsai said.

Photo: CNA

The trend bolstered the US dollar and greenback-based investment tools, Tsai said, adding that local exchange-traded funds (ETFs) were among the tools that moved.

That explained why foreign portfolio investors trimmed their holdings in local shares and New Taiwan dollar deposits, which totaled US$691.3 billion last month, or 1.27 times the value of the nation’s foreign exchange reserves, he said.

Fund outflows continued this month, putting correction pressure on the TAIEX, he said.

However, the NT dollar was resilient, supported mainly by strong exports, Tsai said.

The central bank in March acted to stabilize the local currency, but its interventions have slackened over the past six months, as supply and demand have normalized somewhat, he said.

Taiwan remained the world’s fifth-largest holder of foreign exchange reserves, trailing China, Japan, Switzerland and India, the central bank said.