Foreign exchange reserves hit record US$55 billion

• By Crystal Hsu / Staff reporter

Taiwan’s foreign exchange reserves last month increased by US$2.73 billion to a record US$55.93 billion on the back of value gains of major reserve currencies against the US dollar, the central bank said yesterday.

The reserves expanded for a third straight month despite a continued foreign capital outflow of US$3 billion, about consistent with net-sold positions of NT$80 billion (US$2.61 billion) by foreign institutional investors, central bank Department of Foreign Exchange Director-General Eugene Tsai (蔡炯民) told an online news conference.

“The local currency market was relatively quiet last month due probably to Christmas celebrations in the West,” Tsai said, adding that the central bank intervened moderately.

Photo: Chen Mei-ying, Taipei Times

The New Taiwan dollar rose a mild 0.49 percent versus the greenback, he said.

The US dollar index softened 2.29 percent last month as global markets expected a slowdown in the pace of monetary tightening by the US Federal Reserve.

The Fed last month raised interest rates 0.5 percentage points to tame inflation, after two 0.75 percentage point hikes in its previous adjustments.

The yen picked up 4.59 percent after the Bank of Japan late last month announced it was adjusting its stance on bond purchases, fueling expectations of changes in its easy monetary policy.

The euro gained 3.01 percent against the US dollar, while the yuan picked up 2.43 percent, Tsai said.

For the whole of last year, Taiwan’s foreign exchange reserves expanded by US$6.52 billion, the smallest increase since 2015, Tsai said.

The central bank said at a separate news conference in Taipei that if the government is to distribute NT$6,000 in cash to every Taiwanese after the Lunar New Year holiday to stimulate the economy, as announced on Wednesday, there is no need to print additional banknotes.

The central bank usually sees the return of NT$300 billion in cash after the holiday, it said.

Demand for cash would peak on the eve of the holiday starting on Jan. 20, the central bank said.