Forex reserves reach a record of US$547.33 billion

• By Crystal Hsu / Staff reporter

Taiwan’s foreign exchange reserves last month grew US$631 million to a record high of US$547.33 billion, as the US dollar strengthened against other major reserve currencies despite a net fund flow on the part of foreign stock players, the central bank said yesterday.

It is the fourth consecutive month that foreign exchange reserves have climbed, making Taiwan the world’s fifth-largest holder of foreign exchange reserves after China, Japan, Switzerland and India, the central bank said.

“The local foreign exchange market saw a relative balance in supply and demand, although foreign portfolio managers wired out a net US$437 million,” Department of Foreign Exchange Director-General Eugene Tsai (蔡炯民) said, adding that they wired US$6 billion in capital gains overseas and increased their positions in local shares by US$6.1 billion.

Photo: CNA

At the same time, the US dollar appreciated by 2 percent, while the euro weakened by 3.22 percent, the Japanese yen declined 0.06 percent and the British pound lost 3.43 percent, Tsai said.

Tsai agreed that US Federal Reserve is likely to end its bond purchase program in the first quarter of next year — three months earlier than scheduled — to rein in inflationary pressures.

The move, if realized, would surely affect global financial markets, including the local bourse and foreign exchange market, Tsai said, adding that Taiwan is more susceptible to global capital movements than to international oil price changes.

Global funds tend to flock to the US when the world’s largest economy puts up a robust showing and the Fed raises interest rates, Tsai said.

Over the weekend, Taiwan managed to stay off the US currency manipulation list because there is no evidence suggesting it has engaged in unfair practices to profit from foreign exchange interventions, he said.

Interventions by the central bank equaled US$43.93 billion between July last year and June this year, and were intended to help maintain the foreign exchange market’s stability which had been affected by the US’ quantitative easing, he added.