Foreign exchange reserves drop in Feb.: central bank

The China Post news staff and CNA

TAIPEI, Taiwan — Taiwan’s foreign exchange reserves stood at US$404.08 billion by the end of February, a decline of US$2.477 billion from January, reported the central bank yesterday. The decline concerned a devaluation of various currencies that make up Taiwan’s foreign exchange reserves, such as the euro, against the greenback, the central bank said. Separately, in the currency market, the U.S. dollar fell against the New Taiwan dollar yesterday, shedding NT$0.05 to close at NT$29.720 as the local currency staged a technical rebound in line with its counterparts in the region, dealers said.

A recovering local bourse on the back of foreign institutional buying also placed downward pressure on the U.S. dollar throughout the trading session, the dealers said.

Local central bank intervention in the latter part of the session to prop up the value of the greenback, however, capped gains posted by the New Taiwan dollar, they added.

The U.S. dollar opened at the day’s high of NT$29.770, and moved to an early low of NT$29.650 before rebounding. Turnover totaled US$766 million during the trading session.

The U.S. currency dropped against the New Taiwan dollar soon after the local foreign exchange market opened as traders took strong hints from a jump in value of regional units, in particular the Japanese yen and the South Korean won, the dealers said.

Most of the regional currencies took a hit during the previous session amid concerns that possible further liquidity-easing in Japan will lead to a weakened yen, which could trigger a currency devaluation competition in Asia, they said.

The New Taiwan dollar also got a boost from gains posted by the Taiwan Stock Exchange in which strong buying in financial and high-tech stocks pushed the weighted index up by 0.83 percent at the end of the session, they said.

Foreign institutional investors served as net buyers of NT$3.32 billion (US$111.71 million), prompting traders to sell their U.S. dollars in exchange for New Taiwan dollars to meet fund demands, the dealers added.

Although the currencies in the region made a comeback against the U.S. dollar, fears over a currency devaluation war remained, the dealers said, adding that after the latest rebound, regional units, including the New Taiwan dollar, could resume a downward pattern.

Despite the central bank’s intervention, turnover on the local foreign exchange remained moderate as many traders stayed on the sidelines ahead of a policymaking meeting of the European Central Bank scheduled for March 7, the dealers said.