Foreign Exchange Reserves as at the End of

The foreign exchange reserves of the Republic of China amounted to US$282.09 billion at the end of August 2008, showing a decrease of US$8.81 billion from the figure recorded at the end of the previous month, but an increase of US$11.78 billion if compared to the end of 2007.
The main factor responsible for the drop in foreign exchange reserves in August 2008 was net foreign capital outflow, including:
1. Foreign investors as a group were a net seller in Taiwan’s equity and bond markets in August.
2. Distribution of cash dividends to foreign investors
3. NT dollar deposits held by foreign investors have been drawn down and repatriated (the amount of NT dollar deposits held by foreign investors is now approaching a reasonable level).

Taiwan’s capital account has been liberalized. Foreign ownership now accounts for a substantial and growing share of Taiwan’s stock market capitalization. As a result, the volume of foreign exchange transactions generated by foreign investors has also been on the rise. Correspondingly, the fluctuation in the level of foreign exchange reserves is increasingly influenced by the behavior of foreign investors.
Taiwan has been running a sustained current account surplus for many years. Our balance of payments is in excellent shape. We have more than enough foreign exchange reserves to cover the liquidity needs arising from international payments.

Note: The next dissemination will be made at 16:20 p.m. on Oct 3 , 2008;
the advance release calendar can be accessed on our website at: http://www.cbc.gov.tw/EngHome/ESDDS/calacal.htm