Taiwan’s central bank controls ADIA’s capital transaction

05 November 2013   Category: News, Asia, Global, Taiwan   By Asia Asset Management

The Central Bank of the Republic of China (Taiwan) has required Middle East sovereign wealth fund (SWF) Abu Dhabi Investment Authority (ADIA) to cut down its daily capital remittances to Taiwan amid concerns the enormous capital inflows will cause dramatic local currency fluctuations.

Economic Daily News quoted a market source as saying that ADIA had initially planned to transfer US$1 billion into Taiwanese equities on a one-off basis.

In order to prevent the looming influx of foreign capital from affecting the stability of the Taiwan dollar, the SWF subsequently reached an agreement with the central bank to process the amount in phases – for example, US$100 million per day, said the official. ADIA has accessed Taiwan market before, though the size of its investments was marginal.      

Bank Governor Fai-Nan Perng told local media that the central bank has tightened controls to prevent currency speculation by strengthening the reporting system for large-sum currency transactions.

ADIA is one of the world largest SWFs with total AUM of US$627 billion. According to the SWF’s latest annual report, it had a roughly 10% to 20% weighting in the developed Asia markets in 2012.