TAIPEI, Taiwan — Securities, bonds and Taiwan dollar-denominated deposits held by foreign portfolio investors in Taiwan’s foreign exchange reserves hit a new high at the end of August, according to the Central Bank of the Republic of China.
According to the bank, securities, bonds and Taiwan dollar deposits owned by foreign investors totaled US$302.8 billion, accounting for about 72 percent of Taiwan’s total foreign exchange reserves at the end of last month.
The central bank said the assets held by foreign investors at the end of August were higher than the US$295.5 billion recorded at the end of July. The end-July figure accounted for 70 percent of Taiwan’s total foreign exchange reserves, the bank said.
The ratio of foreign held assets to Taiwan’s foreign exchange at the end of August also reached a new high, the bank added.
At the end of August, Taiwan’s foreign exchange reserves fell US$595 million from a month earlier to US$423.07 billion, stopping an eight-month gaining streak, the central bank’s statistics showed.
The central bank said the fall in the end-August foreign exchange reserves partly reflected the euro’s depreciation against the U.S. dollar, adding that a weaker euro dragged down Taiwan’s foreign exchange reserves as the European currency assets were converted into the U.S. dollar.
The central bank said the weakness of the euro offset the benefits resulting from an increase in returns on the bank’s asset management.
Taiwan was not the only country that saw its foreign exchange reserves fall in August.
Among the countries which suffered a decline in foreign exchange reserves at the end of August, South Korea’s figure totaled US$367.5 billion, down from US$368 billion recorded at the end of July; and Russia’s figure fell to US$465.8 billion from US$468.8 billion recorded in the previous month.
Meanwhile, foreign institutional investors recorded a net fund outflow of US$216 million in August, while they served as net buyers of US$46.66 billion on the main board and net buyers of US$1.33 billion on the over-the-counter market in the month, the central bank said.
The bank said that there were no worries over the net fund outflow by foreign investors and that their net buy in the local market showed the willingness to invest more in local shares.