Taiwan’s forex reserves down slightly at end of June

Taipei, June 6 (CNA) Taiwan's foreign exchange reserves were down slightly in June, largely reflecting a weaker euro against the U.S. dollar in the central bank's asset management portfolio, according to the bank.

The country's forex reserves at the end of June stood at US$457.12 billion, down US$153 million from a month earlier, data compiled by the central bank showed. At the end of May, Taiwan's forex reserves hit a new high of US$457.27 billion.

In June, the euro fell about 0.7 percent against the U.S. dollar so when euro-denominated assets are converted into the U.S. currency in the central bank's asset management portfolio, the latest forex reserves fall accordingly, the bank said.

According to the central bank, holdings of Taiwanese stocks, bonds and Taiwan dollar-denominated deposits by foreign investors stood at US$377.9 billion at the end of June, down US$17.6 billion from a month earlier.

Foreign-held assets at the end of June were equivalent to about 83 percent of Taiwan's foreign exchange reserves, down 3 percentage points from a month earlier. The June ratio was the lowest for 13 months, the central bank data showed.

The ratio fell after foreign institutional investors sold a net US$2.6 billion worth of equities in Taiwan in June, sending the weighted index on the Taiwan Stock Exchange down 0.3 percent in the month.

According to the Financial Supervisory Commission (FSC), the top financial regulator in Taiwan, foreign institutional investors registered a net fund outflow of US$1.88 billion in June, up from a net outflow of US$1.09 billion seen in May.

Harry Yen (???), head of the central bank's Foreign Exchange Department, said foreign fund outflows also reflected the weakness of non-U.S. dollar currencies against the greenback as foreign investors rush to park their funds in the U.S. currency as a safe haven at a time of escalating trade friction between the United States and China.

In addition to a falling euro, the central bank data showed the Taiwan dollar also fell 1.7 percent against the U.S. dollar, the Chinese yuan shed 3.25 percent and the South Korean won plunged 3.3 percent in June.

Yen said the losses suffered by these regional currencies against the U.S. dollar simply resulted from rapid fund movement worldwide, adding he did not see any pressure for the depreciation of regional currencies in a bid to boost their trade competition worldwide.

The central bank has repeatedly 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