Taiwan forex reserves hit high for 10th straight month

Taipei, Taiwan's foreign exchange reserves at the end of January hit a new high for the 10th consecutive month partly on the back of continued fund inflows by foreign institutional investors into Taiwan, according to the central bank.

A stronger euro, which is part of the central bank's portfolio, and an increase in returns on that portfolio also pushed up the amount at the end of last month, the bank said.

At the end of January, Taiwan's forex reserves hit a new high at US$455.72 billion, up US$4.22 billion from the end of 2017. It was the 10th straight month total reserves moved higher.

Harry Yen (???), head of the central bank's Foreign Exchange Department, said that according to bank data, foreign institutional investors had net fund inflows of US$4.499 billion in January, which helped drive forex reserves higher.

The central bank's figure is about US$694 million short of the US$5.193 billion in net fund inflows recorded by the Financial Supervisory Commission, Taiwan's top financial regulator.

Yen said the FSC's figure also included convertible bonds and global depositary receipts issued by Taiwan-based companies, while the central bank only tallied cash inflows.

The increase in net fund inflows in January, he said, reflected the strong performance of Taiwan's stock market, which saw its weighted index gain 460.93 points or 4.33 percent.

As of the end of January, holdings of Taiwanese stocks, bonds and Taiwan dollar-denominated deposits by foreign investors were up US$34.5 billion from a month earlier to US$426.1 billion, the highest level in history, the central bank said.

Foreign-held assets were equivalent to about 94 percent of Taiwan's foreign reserves, also the highest ever, up from 87 percent seen at the end of December.

As for the euro, Yen said, the currency rose about 4.1 percent against the U.S. dollar in January, when the U.S. dollar index, which tracks the currencies of Washington's six trading partners, fell 3.4 percent.

The gains posted by the euro pushed Taiwan's forex reserves higher when converted in U.S. dollars in the bank's portfolio.

The central bank is determined to maintain sufficient forex reserves by improving investment returns, a way to guarantee secure financial markets at home even if foreign institutional investors scramble to move funds out of the country.

Source: Fucus Taiwan