Forex reserves fall a third month

• By Crystal Hsu / Staff reporter

The nation’s foreign exchange reserves last month amounted to US$561.08 billion, falling for the third consecutive month by US$2.93 billion, as foreign portfolio managers cut holdings of local shares, prompting the central bank to step in to smooth out the impact of capital outflows.

Capital outflows showed signs of easing this week after the US Federal Reserve left policy rates unchanged, but more time is needed to observe global fund movements, Department of Foreign Exchange Director-General Eugene Tsai (蔡炯民) said.

“Although the New Taiwan dollar’s deprecation moderated in comparison with September, the central bank decided to intervene to maintain an orderly foreign exchange market,” Tsai told an online media briefing.

Photo: Reuters

Capital outflows, including remittances of trading gains, reached US$5 billion, dragging down foreign exchange reserves, he said.

The yield on the benchmark 10-year US Treasury touched 5 percent for the first time in 16 years last month, as global investors grew uneasy about further hawkish moves or rhetoric by the Fed early this month, which rendered risky assets in markets elsewhere unattractive.

The US dollar index softened a bit after the Fed on Wednesday opted for a policy pause for the second time, reducing worries over an intervention, Tsai said.

However, uncertainties abound and the central bank would keep a close eye to maintain stability in the foreign exchange market, he said.

Despite capital outflows, Taiwan remained the world’s fourth-largest holder of foreign exchange reserves after China, Japan and Switzerland, Tsai said.