The nation saw an increase of US$4.12 billion in its foreign exchange reserves last month, rising for the second consecutive month and bringing total reserves to US$394.43 billion, the central bank said in a statement yesterday.
Taiwan remained the world’s fourth-largest holder of foreign exchange reserves, behind China, Japan and Russia, the bank’s data showed.
The central bank attributed the increase in foreign reserves last month to the appreciation of the euro and other major currencies against the US dollar.
“Foreign exchange reserves denominated in these currencies were worth more in terms of the base currency, the US dollar,” the bank said.
In addition, returns from the management of the nation’s reserves assets also contributed to last month’s increase, the bank added.
The central bank said the monetary easing in some advanced economies has produced increased capital flows to Asia’s emerging markets, including Taiwan.
According to the central bank’s latest tallies, the market value of securities investment and the New Taiwan dollar-denominated deposits held by foreign portfolio investors at the end of last month reached US$221.7 billion, equivalent to 56 percent of foreign exchange reserves.
Meanwhile, the central bank said it plans to auction NT$100 billion (US$3.44 billion) of 364-day certificates of deposit (CD) tomorrow, after it sold NT$100 billion of such certificates in December at an average interest rate of 0.898 percent.
The upcoming auction is the bank’s 21st auction of 364-day CDs since April 2010. The bank has been using the short-term monetary instrument to soak up some of the market’s abundant liquidity.
In related news, the total value of all outstanding loans made by offshore banking units (OBUs) of banks operating in Taiwan hit a new high in January because of fund demand around the Lunar New Year, the central bank said on Friday.
As of the end of January, the total value of all outstanding loans extended by OBUs reached US$60.666 billion, up US$968 million from the previous month, the central bank said, adding that 99. 9 percent of the borrowing was from overseas clients.
The central bank said the ratio was high because Taiwanese small and medium-sized enterprises operating in China had strong demand for capital for the Lunar New Year period in late January.
Of the OBUs of 62 banks operating in Taiwan at the end of last month, 37 were from domestic banks and 25 were from foreign banks, with total assets of a record high of US$149.114 billion, an increase of US$27.471 billion or 22.58 percent from a year earlier.
Most assets, at 41 percent of the total, were in the form of loans.
The total turnover of foreign exchange trading made by all OBUs in January stood at US$21.126 billion, the central bank added.
The data showed that most of the funds went to Asia, at 63 percent, followed by the US with 26 percent and Europe with 8 percent.