Central Bank of China, Taiwan

PRESS RELEASE Release Date: December 5, 2003




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FOREIGN EXCHANGE RESERVES AS OF

NOVEMBER 30, 2003

Foreign exchange reserves amounted to US$202.83 billion at the end of November 2003, showing an increase of US$6,224 million from the figure recorded at the end of last month and an increase of US$41,177 million compared to the end of last year.

The main factors responsible for the increase in foreign exchange reserves from January to November 2003 are:

1.US$23.5bn of net portfolio capital inflow (including convertible bonds and DR issued by domestic companies abroad)

2.Exporters have sold forward foreign exchange ahead of export proceed collection to the tune of US$17bn.

3.Investment returns

4.Both the Euro and the Japanese yen appreciated against the US dollar. Foreign exchange reserves denominated in these currencies were worth more in terms of the US dollar.

The US$16bn trade surplus recorded between January and November 2003, in addition to the increment resulting from factors 3 and 4 listed above, has been largely offset by outflows in the form of (1) overseas expenditure incurred by residents traveling abroad and (2) overseas investment made by residents, including both direct investment and portfolio investment because of foreign exchange liberalization.


Foreign capital inflows tend to be short-term in nature and are subject to sudden reversal. Selling forward foreign exchange in advance will reduce its future supply.

Of the US$202.83 billion in foreign exchange reserves recorded at the end of November 2003, only US$116.63 billion can be considered long-term and stable. The remaining US$86.2 billion consists of (1) short-term portfolio capital inflows; US$ 64.5 billion, and (2) forward foreign exchange positions; US$21.7 billion. The figure for long-term and stable reserves will decline further if future military procurement is taken into account.

It is not unusual for a small but highly open economy with a high savings rate to accumulate sizable foreign exchange reserves. Based on figures published at the end of October 2003, the level of foreign exchange reserves per capita was US$8,698 in Taiwan, US$15,198 in Hong Kong and US$20,063 in Singapore.


Note: The next dissemination will be made at 16:20 p.m. on January 5, 2004;

the advance release calendar can be accessed on our website at: http://www.cbc.gov.tw/EngHome/ESDDS/calacal.asp