Finance Minister Chang Sheng-ford said on Monday that investors should be careful when investing in the Chinese currency – the RMB.
Chang’s comment came after China’s central bank announced on Sunday that it would lower its reserve requirement ratio for all banks by 0.5% starting on April 20. The move will inject 1.2 to 1.5 trillion RMB into the market to help spur bank lending and combat lagging growth.
The latest cut is the deepest single reduction since the Global Financial Crisis of 2008. As of March, Taiwanese investors have about 325 billion in RMB reserves. The finance minister said that investors should be watching to see if China will enact more monetary easing measures such as cutting interest rates and depreciating the Chinese currency. Investors with large RMB exposure could suffer great losses if the RMB depreciates or interest rates are cut.