Taiwan’s foreign exchange reserves drop

• By Crystal Hsu / Staff reporter

Taiwan’s foreign exchange reserves last month fell by US$118 million to US$569.42 billion, dragged by depreciations in major reserve currencies against the US dollar and an intervention to shore up the local currency, the central bank said yesterday.

The monthly retreat ran counter to TAIEX rallies on the back of global fund inflows to take advantage of excitement over artificial intelligence.

“The divergent showings in the local bourse and New Taiwan dollar are not abnormal, but moved in sync with a strong greenback and Wall Street,” Department of Foreign Exchange Director-General Eugene Tsai (蔡炯民) said.

The NT dollar and the TAIEX have displayed trajectories closely linked to the US dollar and major US tech shares, Tsai said.

The US dollar last month gained 0.85 percent, while the NT dollar softened 0.87 percent, the yen fell 1.39 percent, the yuan dropped 0.26 percent and the Australian dollar fell 0.82 percent, he said.

At the same time, heavyweight tech shares in Taiwan hit fresh highs, taking cues from rallies in US semiconductor and technology shares, he added.

Global fund inflows last month totaled US$5.08 billion according to the Financial Supervisory Commission’s measure and about US$3 billion according to the central bank, after including profit remittances abroad, Tsai said.

Foreign institutional players raised holdings in local shares mainly via currency swap operations and cash dividends from local tech firms, which do not boost the local currency, he said.

The US dollar’s uptrend came after healthy US economic data dashed hopes that the US Federal Reserve would cut interest rates as early as this month and as many as six times this year, Tsai said.

Taiwan remained the world’s fourth-largest holder of foreign exchange reserves after China, Japan and Switzerland, he said.