FOREIGN INVESTING:
Investors from around the world have set records over the past several months as money pours into explosively expanding Taiwanese holdings
Foreign exchange reserves at the end of last month moved higher for the second consecutive month, while foreign investors’ holdings in Taiwan-listed stocks, bonds and New Taiwan dollar-denominated deposits neared US$1.9 trillion, the central bank reported on Friday.
The nation’s foreign exchange reserves rose US$2.586 billion from a month earlier to US$605.07 billion, largely due to an increase in interest income and a rise in returns from the central bank’s investment portfolio.
The central bank last month intervened to smooth the NT dollar’s volatility, but the intervention was two-way, offsetting the impact in each direction, so it only had a limited impact on the month’s foreign exchange reserves, Department of Foreign Exchange Director-General Eugene Tsai (蔡炯民) said.
Photo: Reuters
Last month’s figure cemented Taiwan’s status as the fourth-largest foreign exchange reserve holder in the world, behind China, Japan and Switzerland, the central bank said.
Foreign investors held a record high of US$1.896 billion in Taiwan-listed stocks, bonds and NT dollar-denominated deposits last month, up from US$1.61 trillion in April, the data showed.
Those holdings were equivalent to 313 percent of Taiwan’s total foreign exchange reserves, a ratio that also hit a new high, up from 268 percent in April, the data indicated.
The significant rise in foreign investors’ Taiwan holdings in just one month came on the back of a booming stock market last month, when the TAIEX soared 5,806.31 points, or 14.92 percent, Tsai said, adding that it was led by tech stocks and neared 45,000 points amid optimism over artificial intelligence development.
The high-flying bourse prompted foreign investors to raise their holdings of NT dollar-denominated assets last month, he said.
Foreign investors still remitted US$6 billion into the local market even after moving their earnings out of the country, he added.
In terms of US dollar movements, the greenback has faced uncertainty given geopolitical unease, so it is not easy to predict how the US unit will move, Tsai said.
The US Federal Reserve is more likely to leave its key interest rates unchanged this year than to raise rates after new Fed chair Kevin Warsh took office late last month, even though inflation continues to breach its 2 percent target, he added.
Taiwan’s central bank has said it will maintain ample foreign exchange reserves to ensure domestic financial markets remain stable and guard against any sudden movement of funds out of the country by foreign institutional investors.
www.taipeitimes.com