Taiwan’s foreign exchange (FX) reserve has hit a new record high in September 2021. The reserve hit $1.32 million in August, but it rose astonishingly to $544.9 billion in September, according to reports.
Taiwan’s central bank stated that the recent increase in its FX reserve is a result of good foreign exchange management.
Director-General of the Department of Foreign Exchange, Eugene Tsai, stated that the USD gained 1.73% in September, which enabled the bank‘s investment gains to take in unfavorable exchange issues.
US government bonds have gained some support as the US Federal Reserve plans to cut down the purchasing program. Some Fed members are suggesting that the whole program may be stopped by March next year. Tsai said the company is working on this assumption.
Record Levels For Two Consecutive Months
From the data compiled by the Central Bank, the September record is the second consecutive month the reserve has had a new monthly high.
The Taiwan central bank said it has maintained its forex reserve as the fifth largest in the world. China’s currency has the largest FX reserve with $3.23 trillion. The second-largest FX reserve comes from Japan, with $1.29 trillion. Switzerland and India come third and fourth with $1.019 trillion and $76.7 billion respectively.
Meanwhile, the value of Taiwan’s foreign investor holdings, especially in bonds and stocks, stood at $691.3 billion at the end of September. This is slightly lower than the $719.7 billion it recorded in August.
Taiwan Commits To Maintain High FX Reserve
The holdings are presenting 127% of the country’s total FX reserve in September, which is slightly below the 132% it held the previous month.
According to Tsai, the lower value shows that there was a weaker equity market in September, as it reduced the value of foreign investor holdings.
The Taiwanese central bank has reiterated that it will continue to maintain strong FX reserves to stabilize domestic financial markets. It also said a steady reserve is important to provide cover for any unexpected movement of funds out of Taiwan by foreign institutional investors.