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Officials confident of economic health after stock market plunge

Officials confident of economic health after stock market plunge

Taipei, Aug. 24 (CNA) Financial regulators and central bank officials said Monday's stock market plunge will not affect Taiwan's solid finances that are backed by considerable foreign exchange reserves and current account surpluses.
Tseng Ming-chung, chairman of the Financial Supervisory Commission, said the history-making mid-session plunge of the Taiwan stock exchange index was caused by worries about the Chinese and Hong Kong markets.
If share prices in the United States do not fall too heavily overnight, Tseng said the benchmark Taiex index will be "rather stable" the next day.
The Taiex plunged nearly 5 percent on heavy turnover after shedding nearly 7.5 percent in just under 90 minutes of trading, the biggest plunge in a session in the Taiwan exchange's history.
Tseng said the heavy turnover of NT$167.8 billion (US$5.08 billion) on local equity markets Monday was an indication that many investors were willing to pick up falling shares toward the end of the session.
The National Stabilization Fund's net purchase of NT$2.33 billion in shares and a high number of futures orders placed in the afternoon also boosted confidence that Taiwan's stock exchange will stabilize on Tuesday as long as Wall Street does not take a drubbing overnight.
In Kaohsiung, Tseng's deputy, FSC Vice Chairperson Huang Tien-mu, said the National Stabilization Fund and Labor Pension Fund will keep entering the stock market to stabilize investor confidence.
The stock market row spilled over to the foreign exchange market. The Taiwan dollar fell to its weakest level against the U.S. dollar in six years on Monday amid a massive sell-off in Asian stock markets, losing NT$0.084 to close at NT$32.96 to the greenback.
Another reason for the Taiwan's dollar's fall was the depreciation of the Korean won against the greenback, dealers said.
On the plunge of the Taiwan dollar, a central bank official said sufficient liquidity -- backed by Taiwan's rich foreign exchange reserves and current account surpluses, plus little debt that needs to be serviced in foreign currencies -- should be able to stabilize the nation's finances. Wu Yi-chuan, deputy director of the central bank's Economics Research Department, said Taiwan did better than many other countries in tiding over the 1997-98 Asian financial crisis and the 2008-09 global financial tsunami.
She said Monday's stock market turmoil was caused mainly by the economic and financial situations in China and uncertainty over whether the U.S. Federal Reserve will raise interest rates next month.
"So we will have to see what happens next," Wu said. (By Wei Shu, Tsai Yi-chu, Kuo Chung-han and S.C. Chang)


Updated : 2021-09-23 17:51 GMT+08:00