Some NT$158 B. of Hot Money Has Exited Taiwan
2011/03/11 | By Philip LiuTaipei, March 11, 2011 (CENS)--Thanks to the concerted effort of the Central Bank of China (CBC) and the Financial Supervisory Commission (FSC), some NT$157.5 billion worth of hot money has exited Taiwan, reported Perng Fai-nan, CBC governor, at the financial-affairs committee of the Legislative Yuan yesterday (March 10).
The change of the deposits from NT dollar to U.S. dollar for foreign investors in borrowing securities, for instance, has expelled some NT$121.4 billion worth of such deposits from the island entirely, for instance.
Some NT$210 billion of foreign funds is still parking at the government-bond market, and their holders will be asked to remit their funds out of the country after the maturity of the bonds, unless they can justify their investment purposes, according to Perng.
Some NT$236.3 billion worth of foreign funds is staying on the island in the form of NT-dollar deposits. After excluding working capital equivalent to 3% of their securities investment, the reasonable level for NT-dollar deposits by foreign investors should stand at NT$150 billion, leading a balance of NT$86.3 billion, suspected as hot money. Plus the aforementioned NT$210 billion in the government-bond market, the suspected amount of hot money now amount to NT$300 billion, according to Perng. “We are monitoring the suspected hot money daily to prevent it from fueling the appreciation of the NT dollar,” remarked Perng.
The CBC governor, however, remarks that the CBC leaves the exchange rate of the local currency to the decision of supply and demand in the market, stepping into the market only in cases of wild fluctuation in the exchange rate.
The CBC, said Perng, will utilize all the monetary-policy vehicles at its disposal in helping achieve price stability, a statement seemingly indicating its board of directors is likely to raise the policy interest rate by 0.125 of a percentage point, for the third quarter in a row, at its next meeting scheduled at the end of this month.