Taiwan' s Forex Reserves Saw Highest Monthly Rise in Dec. 2005

Taipei, Jan. 10, 2006 (CENS)--Taiwan' s foreign exchange reserves stood at US$253.2 billion as of the end of December of 2005, showing the highest monthly increase of US$1.5 billion since April of the same year and representing the first upturn after dropping for three consecutive months, according to statistics released by the Central Bank of China (CBC) here.

Officials at CBC' s Foreign Exchange Department indicated that there were three major factors behind the growth of forex reserves last December, including the massive inflow of foreign capital, the gains from operations of existing forex reserves, and the increase in value of CBC-held foreign currencies generated mainly from the appreciation of the euro and the Japanese yen against the U.S. dollar.

In December 2005 the net inflow of foreign capital amounted to US$8.5 billion, boosting the total of such inflow to US$28.85 billion for the full year, a sharp rise of US$15.1 billion from 2004' s US$13.75 billion. However, Taiwan' s forex reserves posted an annual increase of only US$11.5 billion in 2005, less than half of the corresponding figure of US$35.1 billion recorded a year earlier.

Market observers analyzed that increasing overseas investments by domestic life insurance firms and individual investments in overseas bonds led to massive capital outflow in 2005, thus slowing down the increase in forex reserves for the year.

CBC' s statistics showed that as of the end of September of 2005 Taiwan' s forex reserves posted at US$253.7 billion, and some 44.3% or US$112.4 billion of which was foreign funds remitted into Taiwan for investment in the local bourse.

Today Taiwan is still the world' s third-largest holder of forex reserves, next only to Japan and mainland China. Last year, Taiwan was still ahead of its strong trading rival, S. Korea, in forex reserves, with a large gap of US$42.9 billion.

Forex reserves held by Asia major economic powers, Dec. 2004, Nov. & Dec. 2005 Unit: US$100M
M/Y	Taiwan	Japan	S. Korea	Hong Kong	Singapore	China
Dec. 2005	2, 532.9	N/A	2, 099.67	N/A	N/A	N/A
Nov. 2005	2, 517.83	8, 242.69	2, 075.79	1, 230.5	1, 132.56	7, 942
Dec. 2004	2, 417.38	8, 242.64	1, 981.75	1, 234.49	1, 122.17	6, 099.32

Source: CBC