Forex reserves hit new high of US$259b as of April

This article was published by the Taiwan Headlines on May 12, 2006. It reports that at the end of April 2006, Taiwan's foreign exchange reserves witnessed a monthly rise of US$1.984 billion and reached US$259.035 billion. This was the highest reserve climb ever recorded. It also enabled Taiwan to maintain its position as the world's third largest holder of forex reserves.

Officials at the Central Bank of China in Taiwan attributed the increase of forex reserves to gains from the operations of existing forex reserves, as well as to the increased value of foreign currencies held by the bank. Such increased value was generated by the appreciation of the euro and British pound against the U.S. dollar.

Some analysts argued that the recent massive flow of foreign capital was also one of the factors that pushed up Taiwan's forex reserves. However, according to officials at the Central Bank of China in Taiwan, in April 2006, the value of the inflow of foreign capital and the outbound investments posted at almost the same level of about US$5 billion. As a result, the balance of the two probably had very little influence on the forex reserves for the month.

The inflow of foreign capital usually accounts for half of Taiwan's total forex reserves. Currently, much of such capital is believed to be flowing into the local bourse.