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UPDATE 1-Fubon Financial says to raise FX hedging as profit drops in Q4
March 24, 2017 / 8:05 AM / 8 months ago

UPDATE 1-Fubon Financial says to raise FX hedging as profit drops in Q4

(Adds comments, details)

TAIPEI, March 24 (Reuters) - Fubon Financial Holding Co , parent of Taiwan’s second-biggest life insurer, said on Friday it will raise its currency hedging positions due to massive foreign fund inflows to Asia, including Taiwan.

Fubon and other local rivals, which invest heavily in overseas markets, have been hit by the stronger Taiwan dollar , which has strengthened about 6 percent so far this year and is Asia’s second-best performer after the Korean won.

Fubon’s foruth-quarter net profit fell to T$8.1 billion ($264.8 million), sharply lower than T$16.6 billion in the previous three months, the company has said.

Chief financial officer Eddie Chen attributed the drop partly to Taiwan’s surging currency. “The Taiwan dollar has an impact,” Chen said on the sidelines of the company’s investor conference.

Taiwan’s central bank said after its quarterly rate meeting on Thursday that large, frequent foreign fund flows into and out of Taiwan have affected local forex and financial markets.

The central bank, fearful of being labelled a currency manipulator by U.S. President Donald Trump, has pulled back on intervention to weaken the Taiwan dollar.

The effects have been particularly toxic for local insurers, which have been hit with a T$14 billion ($455 million) loss on the foreign exchange risk reserves they hold to contain currency volatility. (Reporting by Faith Hung; Editing by Jacqueline Wong)

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