The central bank advised the bureau to raise the limit to 45 percent, so insurers could sell more US dollar-denominated policies, which would increase demand for the US dollar and slow the strong NT dollar, bureau Director-General Shih Chiung-hwa (施瓊華) told reporters by telephone yesterday. If the commission decides to raise the ceiling, it would ask life insurers to inform policyholders of the foreign-exchange risks, she added. For example, it is economical for people to exchange local currency into the greenback to pay their US-denominated premiums, as the NT dollar has remained strong, but if the NT dollar weakens, the foreign-exchange rate would no longer favor policyholders, the official said. The NT dollar yesterday closed lower at NT$28.82, approaching the central bank’s reported defense threshold of NT$28.50. “That would be too big of a change, as life insurance companies invest tens of trillions of NT dollars overseas,” Shih said.

Source: Taipei Times November 20, 2020 15:56 UTC