Taiwan’s foreign exchange reserves last month shrank US$1.15 billion to US$547.81 billion, the second-lowest level this year as foreign capital continued to flow outward in search of better yields, the central bank said yesterday.
The latest balance put an end to two consecutive months of gains, and came after foreign portfolio managers raised stakes in local shares while wiring about US$8 billion to US$9 billion of cash dividends and investment gains abroad, Department of Foreign Exchange Director-General Eugene Tsai (蔡炯民) told an online news conference in Taipei.
The volume of capital outflow is the highest in four months, consistent with the US dollar index’s 1.16 percent uptick during the same period, Tsai said, adding that the euro and yuan weakened against the greenback.
The TAIEX recovered 1.18 percent, or 174.34 points, Taiwan Stock Exchange data showed after the government on July 12 said that it would activate the National Stabilization Fund to shore up the local bourse.
Altogether, foreign institutional players sold more than NT$1.05 trillion of local shares from March to last month in response to global monetary tightening and other unfavorable developments, central bank data showed.
The US Federal Reserve last month raised its policy rate by 0.75 percentage points for the third time this year in an effort to fight inflation.
Taiwan’s central bank had to intervene in the foreign exchange market to help stabilize the local currency, Tsai said.
It repeated the practice this week when it spotted larger fluctuations and transactions in the local currency market after China took action to protest the visit of US House of Representatives Speaker Nancy Pelosi, he said.
Taiwan remains the world’s fourth-largest foreign exchange reserve holder after China, Japan and Switzerland, the central bank said.
The New Taiwan dollar yesterday closed up NT$0.044 against the US dollar, regaining some strength after hitting NT$30.01 in morning trading.
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