Taiwan bars foreign investor money in time deposits

Nov 10, 2009, 13:52 GMT

Taipei - Taiwan on Tuesday barred foreign investors from putting money in time deposits in a bid to prevent currency speculation and to channel foreign funds into the stock market.

Under the bank taking immediate effect, foreign investors cannot put their money into time deposits, nor extend their existing time deposits, the Financial Supervisory commission said in a statement.

Till now foreign investors could put their money in time deposits for three months, and could extend the deposits once.

The government move comes one month after central bank governor Perng Fai-nan criticized foreign investors for putting their money in deposits in waiting for a chance to speculate on the currency market.

'Foreign funds that do not comply with the stated purpose of their entry must go out,' he told parliament.

According to the central bank, there are nearly 10 billion Taiwan dollars' (310 million US dollars) worth of foreign money in time deposits in Taiwan, accounting for 0.12 per cent of the total foreign funds in Taiwan.

While the official aim of the ban on putting foreign money in time deposits is to prevent speculation, some analysts see it as the government's effort to channel foreign money into Taiwan's stock market to boost the island's economy.

'The government has nearly used up its money to invest and boost the economy, so it is turning its attention to foreign funds,' Peter Lin, a financial analyst, said.