By Karen Lema
MANILA (Reuters) – Capital outflows are a “temporary phenomenon” and Taiwan, which has foreign reserves, has enough capacity to maintain stability in its financial markets, finance minister said. Su Jain-rong said on Wednesday.
Taiwan’s stock market and currency have tumbled in recent weeks amid sharp U.S. interest rate hikes and a stronger dollar, as well as fears of a global economic slowdown.
In an interview with Reuters in Manila on the sidelines of the Asian Development Bank’s annual meeting, Su acknowledged concerns about capital outflows, but noted that Taiwan’s central bank has publicly stated that foreign exchange reserves are high.
“So capital outflows may be temporary. But we have enough capacity to maintain stability in financial markets,” he said.
Foreign investors sold dollars 33 Shares were worth $800 million at the end of August, according to data from the Taiwan Stock Exchange.
The Taiwan dollar has depreciated 13% against the US dollar this year, while the benchmark stock index has fallen 26%, one of the worst performers in Asia.
and $545.31 As of August, Taiwan has 1 billion foreign exchange reserves, if necessary, Taiwan has ample funds to support its currency and economy.
Export growth
Taiwan, a major semiconductor producer, benefits from the COVID- pandemic Demand for consumer electronics such as tablets during work and study from home, but that demand is now declining as the global economy faces a recession and soaring inflation.
Su said export growth in the fourth quarter and next year could be “down to single-digit growth”, but added that would be off a high base.
“However, we are now watching carefully where the global economy is headed.”
The fourth quarter is traditionally the high point for Western countries’ exports before Christmas.
Taiwan’s exports edged up just 2 percent year-on-year, which fell short of economists’ expectations in August, with the Treasury Department forecasting a possible contraction of as much as 3 percent this month, citing the impact of global inflationand the war in Ukraine.
Taiwan also faces another uncertainty over military and political tensions with China, which counts the island as one of its provinces. Taiwan strongly opposes China’s sovereignty claims.
China conducted military exercises near Taiwan last month after U.S. House Speaker Nancy Pelosi visited Taipei.
Su said Taiwan – involved in the bank as “Chinese Taipei” despite government objections – hoped the Chinese attack would not happen.
“I think everyone knows that once that happens, it (will be a) disaster,” he added.
“Everyone knows the seriousness of the matter, needless to mention it,” Su said when asked if it would be raised at the bank meeting. “Maybe a side meeting, a bilateral meeting.”
($1=.8740 TWD)
