Taiwan’s foreign exchange reserves hit a new record high at the end of September on the back of an increase in returns from the central bank’s portfolio management, the central bank said Tuesday.

Data compiled by the central bank showed that as of the end of September the country’s forex reserves rose US$1.321 billion from a month earlier to US$544.899 billion, marking the second consecutive month a new monthly high has been achieved.

Tsai Chiung-min (???), head of the bank’s Foreign Exchange Department, said while a stronger U.S. dollar cut the value of Taiwan’s forex reserves when non-greenback denominated assets were converted into U.S. dollar terms, the higher returns from portfolio management in the month still pushed up the country’s forex reserves.

According to the central bank, Taiwan continues to have the fifth largest forex reserves in the world after China (US$3.23 trillion at the end of August), Japan (US$1.298 trillion as of the end of August), Switzerland (US$1.019 trillion at the end of August) and India (US$576.7 billion as of Sept. 24).

Meanwhile, as of the end of September, the value of foreign investor holdings in Taiwan stocks and bonds and Taiwan dollar-denominated deposits stood at US$691.3 billion, down from US$719.7 billion a month earlier, the central bank said.

Those holdings represented 127 percent of Taiwan’s total foreign exchange reserves as of the end of September, down from 132 percent the previous month, the central bank added.

Tsai said the declines reflect a weaker equity market in the month which pushed down the value of foreign investor holdings.

In September, the Taiex, the weighted index on the Taiwan Stock Exchange, fell 555.52 points or 3.18 percent from a month earlier due to volatility on global markets.

The central bank has said it will maintain ample forex reserves to ensure domestic financial markets remain stable and guard against any sudden movement of funds out of the country by foreign institutional investors.

Source: Focus Taiwan News Channel