Forex reserves hit high for 12th straight month

Taipei, Taiwan's foreign exchange reserves as of the end of March hit a new high for the 12th consecutive month, largely on the back of an increase in returns on funds managed by the central bank from a month earlier, according to the bank.

However, the euro's depreciation against the U.S. dollar offset the effects of higher investment returns in the month to slow the growth in the month-on-month increase in Taiwan's foreign reserves at the end of March after euro-denominated assets were converted into the greenback, the central bank said.

Data compiled by the central bank shows that Taiwan's forex reserves as of the end of March stood at US$457.19 billion, up US$467 million from the end of February. The growth was shy of a month-on-month rise of US$997 million in February.

Harry Yen (???), head of the central bank's Foreign Exchange Department, said the euro, which is part of the central bank's portfolio, dropped about 0.1 percent against the U.S. dollar, causing a drop in value of euro-denominated assets in U.S. dollar terms.

However, Yen said the appreciation of the Chinese yuan, the South Korean won and the Japanese yen against the U.S. dollar in the month helped the central bank mitigate the adverse impact of the weaker euro in its portfolio.

As of the end of March, holdings of Taiwanese stocks, bonds and Taiwan dollar-denominated deposits by foreign investors were up US$6.2 billion from a month earlier at US$415.4 billion after the local main board rose about 1 percent, which boosted market capitalization owned by foreign institutional investors, the central bank said.

Foreign-held assets at the end of March were equivalent to about 91 percent of Taiwan's foreign reserves, up from 90 percent seen at the end of February, while foreign institutional investors sold a net NT$45 billion (US$1.55 billion)-worth of local equities and recorded a net fund outflow of more than US$600 million in the month, the central bank added.

The central bank said it is committed to maintaining ample forex reserves by improving investment returns to guarantee secure financial markets at home, even if foreign institutional investors move funds out of the country.

Source: Focus Taiwan News Channel