March 22, 2017
TAIPEI (Reuters) – Taiwan’s central bank has asked some custodian banks to advise their clients not to remit fresh capital into Taiwan that would be used to invest in the financial markets, two people with direct knowledge of the matter told Reuters on Wednesday.
The move eases upward pressure on the Taiwan dollar , which has gained around 6 percent against the U.S. dollar so far this year.
“I’m dumbfounded. The clients have already bought stocks and you don’t let them remit in. How do you settle the trade?” said one of the people with direct knowledge of the matter.
Strong foreign fund flows have pushed Taiwan’s benchmark stock index to near 10,000 points, a level it has not closed above in 17 years.
When asked about the matter, a central bank official would only say Taiwan has liberalized its capital account so capital flows can freely move, including foreign funds investing in local shares.
Custodian banks handle investments for foreign investors in Taiwan that typically relate to financial markets.
(Reporting by Roger Tung; Writing by J.R. Wu; Editing by Jacqueline Wong)
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