Taipei - Taiwan's foreign exchange reserves dropped slightly to 278.15 billion US dollars at the end of October from the previous month, the island's central bank said in a statement on Wednesday.

The 2.98-billion-US-dollar, or 3-per-cent, month-on-month decrease was however an increase of 7.84 billion US dollars over the same period last year, the bank said.

Net foreign capital outflows, including net selling in the local stock market by foreign institutional investors to remit funds abroad, were the main factor for the decline, the bank said.

The bank has kept its foreign exchange reserves in the denominations of euros, US dollars, Japanese yen and other major currencies in various major overseas banks.

The reserves - the fifth largest in the world after China, Japan, Russia and India - have prompted the central bank to mull setting up a sovereign wealth fund. (dpa)