By Crystal Hsu / Staff Reporter
Taiwan’s foreign exchange reserves fell last month for the second straight month to $545.48 billion as capital outflows persisted ahead of planned monetary tightening by the US Federal Reserve, the central bank said yesterday.
Foreign portfolio managers have reduced their holdings of local equities and shifted an additional $8 billion in cash dividends and capital gains offshore in a bid to earn better returns elsewhere, the Department’s chief executive said. foreign exchange, Eugene Tsai (蔡炯民), during an online press conference in Taipei.
The capital movements came after the Fed indicated that rate hikes of 0.75 percentage points were likely and needed to fight inflation.
The hawkish stance has increased the risk of an economic hard landing in the United States, the world’s largest end market for tech products, which would hurt Taiwan’s exports, Tsai said.
In the first eight months, capital outflows amounted to $43 billion, pushing down the TAIEX and the local currency, he said.
The New Taiwan Dollar has lost 10.83% against the US dollar so far this year after closing at NT$30.71 in Taipei yesterday, while the depreciation last month reached 1.63%, a- he declared.
“The central bank did not sit on the sidelines, but stepped in to help slow the decline,” Tsai said, adding that the U.S. dollar index rose 2.64% last month.
The NT dollar remained relatively strong against the won and the yen, based on their nominal effective exchange rates, he said.
International energy and commodity prices have more influence than exchange rates on Taiwan’s consumer prices, Tsai said.
The high consumer price index readings likely peaked given the recent international corrections in oil and commodity prices, he said.
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