Taipei: Taiwan's foreign exchange reserves experienced a decline at the close of December, reflecting the central bank's intervention to curb further depreciation of the Taiwan dollar against the U.S. dollar, as reported by the bank. Taiwan's forex reserves stood at US$576.677 billion at the end of 2024, marking a decrease of US$1.297 billion from the previous month. However, this figure also represents an increase of US$6.08 billion, or 1.07 percent, from the end of 2023, based on central bank data released Monday.
According to Focus Taiwan, the rise in returns from the central bank's management of its investment portfolio helped counterbalance the impact of the bank's U.S. dollar sales during its market intervention in December. Throughout 2024, the central bank made periodic interventions in the local forex market to manage market volatility, as the U.S. dollar strengthened by NT$0.2046 or 6.24 percent against the Taiwan dollar for the entire year, marking the third consecutive year of depreciation.
The central bank revealed that it sold US$9.06 billion more U.S. dollars than it purchased during its market intervention in the first half of 2024, while figures for the second half were not immediately available. Tsai Chiung-min, head of the central bank's Foreign Exchange Department, stated that the U.S. dollar remained strong against the Taiwan dollar, particularly in the fourth quarter of last year. This was amid concerns that the return of U.S. President-elect Donald Trump, who has pledged to raise tariffs, could lead to inflation and prompt the Federal Reserve to decelerate its rate cuts.
Tsai noted that compared to other non-U.S. currencies such as the South Korean won and the Japanese yen, the Taiwan dollar maintained relative stability, supported by robust export performance. Additionally, central bank data indicated that the value of foreign investors' holdings of Taiwan-listed stocks and bonds and Taiwan dollar-denominated deposits increased to US$836.9 billion at the end of December, up from US$802.5 billion at the end of November.
These holdings accounted for 145 percent of Taiwan's total forex reserves at the end of December, up from 139 percent as of the end of November. Tsai attributed the increase mainly to a rising stock market, which encouraged foreign investors to hold more Taiwan dollar-denominated assets in December. Taiwan remains the fourth largest holder of foreign reserves globally, following China (US$3.27 trillion), Japan (US$1.08 trillion), and Switzerland (US$822.0 billion), as per the central bank's report.