The central bank announced today that the foreign exchange reserve at the end of February was US$558.372 billion, an increase of US$1.229 billion from the end of January, and set a record high for four consecutive months.

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[Reporter Chen Meiying/Taipei Report] The central bank announced today that its foreign exchange reserves at the end of February were US$558.372 billion, an increase of US$1.229 billion from the end of January, setting a new record for four consecutive months. Among major countries in the world, Taiwan’s foreign exchange reserves still rank first in the world 4 large.

Cai Jiongmin, Director of the Central Bank's Foreign Exchange Bureau, said that the increase in foreign exchange reserves in February was mainly due to the income from investment and use of foreign exchange reserves, especially the central bank holds a large part of U.S. debt, and U.S. debt yields mostly fall in February, May, August and November. Therefore, although the U.S. dollar strengthened in February, and the U.S. dollar index rose by 3.05%, non-U.S. currencies such as the euro, British pound, and Japanese yen fell by more than 2-3% respectively, and the conversion of foreign currency assets held by the central bank into U.S. dollars decreased. In the end, there was still a net increase of US$1.229 billion.

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The central bank also announced the inflow and outflow of foreign capital in February. Cai Jiongmin said that the principal remittance of foreign capital in February was about 2.45 billion US dollars, and the net remittance of foreign capital was about 500 million US dollars after deducting the remittance of surplus.

The Taiwan dollar depreciated by 1.41% in February, but it rose first and then depreciated. The closing price at the end of February was roughly the same as the last trading day before the Lunar New Year.

The central bank entered the market to "buy foreign exchange" in early February when the market was selling U.S. dollars on a large scale. In late February, the demand for U.S. dollars surged, and the central bank switched to "selling foreign exchange".

Cai Jiongmin analyzed that the US dollar strengthened after mid-February, mainly because employment, inflation and other data were higher than market expectations, which caused the market to revise its original overly optimistic view and instead agree with the rate hike path released by the Federal Reserve in December last year. That is to say, the terminal interest rate will rise to 5.25%, and there will be no interest rate cut this year. Even the recent futures market believes that there is a slightly greater than 50% probability that the interest rate will be raised by 3 yards this year, that is, March, May, and June will each rise by 1 yard. Rates were raised to 5.25 to 5.5%.

Cai Jiongmin said that the Fed’s March meeting will release the latest interest rate hike path map. He believes that the forecast in December last year should remain unchanged, but the futures market forecast is changing every day, but the recent foreign capital transactions are not large. Although the U.S. 10-year bond yield has broken through 4% again, the investment credit and life insurance industries have made some moves to focus on higher returns, but it is not particularly obvious. There has not been much fluctuation in the foreign exchange market in recent days.

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