Taiwan’s foreign exchange reserves rose in May for the first time in three months because of an increase in returns on the central bank’s forex reserve portfolio, the bank said Monday.
The U.S. dollar’s depreciation against other major currencies also contributed to the higher forex reserves as of the end of May as non-assets dominated in other currencies were converted into U.S. dollars, it said.
Forex reserves at the end of May totaled US$548.85 billion, up US$3.79 billion from the end of April, central bank data showed.
Taiwan remained the fourth largest holder of forex reserves in the world after China (US$3.1 trillion), Japan (US$1.2 trillion), and Switzerland (US$953.4 billion), according to the central bank.
Tsai Chiung-min (???), head of the central bank’s Foreign Exchange Department, said the central bank had cut its U.S. dollar holdings to buy Taiwan dollars and prevent exchange rate volatility in March and April, leading to a fall in Taiwan’s forex reserves.
In May, however, the U.S. dollar got stronger in the first half of the month and then weakened in the second half, and the bank did not feel it was necessary to intervene as much to stabilize the Taiwan dollar, minimizing any impact on reserves, Tsai said.
At the end of May, the value of foreign investor asset holdings in Taiwan-listed stocks and bonds and Taiwan dollar-denominated deposits rose from US$602.6 billion to US$629.0 billion in the wake of a recovery in share prices, the central bank said.
Those holdings represented 115 percent of Taiwan’s total foreign exchange reserves as of the end of May, up from 111 percent at the end of March, the central bank added
In May, the Taiex, the weighted index on the Taiwan Stock Exchange, rose 215.59 points or 1.30 percent to close at 16,807.77.
The central bank has said it will maintain ample forex reserves to ensure domestic financial markets remain stable, as well as to guard against any sudden withdrawal of funds from the country by foreign institutional investors.
Source: Focus Taiwan News Channel