TAIWAN CURBS INFLOWS OF FOREIGN EXCHANGE Taiwan's central bank announced that as from today the overseas foreign exchange borrowings of local and foreign banks would be frozen at the level they reached at the end of May. The central bank's statement added that the measure would be effective until the end of July. Bankers said the measure is designed to curb the inflow of foreign exchange and slow the growth of money supply. They added that the move, which sparked a record single day plunge of the local stock market, would limit their ability to lend foreign exchange to importers and exporters. Foreign exchange borrowings by local and foreign banks reached almost 12 billion U.S. Dlrs by the end of April, according to official statistics. Last week the central bank said that from today it would reduce its purchase of forward U.S. Dollars from banks to 40 pct from 90 pct of the value of the contract. It said the move was needed because of "distortions" in the foreign exchange market. Exporters, nervous about the appreciating Taiwan dollar, have been heavily selling forward U.S. Dollars on the interbank market to avoid exchange rate losses. Official figures show that forward U.S. Dollar sales in May reached a record of almost six billion U.S. Dlrs against 5.9 billion in April. All Taiwan's foreign exchange earnings must be converted into local dollars, boosting money supply at a time of booming exports. Money supply rose a seasonally adjusted 51.86 pct in the year to end-April, raising fears of higher inflation. In March the central bank clamped tight restrictions on remittances of foreign exchange by companies and individuals to Taiwan in a move to curb inflows of speculative money. Economists and bankers estimate that the rising value of the local dollar has attracted about ten billion U.S. Dlrs of speculative money into Taiwan since early last year. It has flowed in mainly from Hong Kong, Japan and the U.S.. Since September 1985 the Taiwan dollar has risen by about 22 pct against the U.S. Dollar. Bankers said the government's efforts to stabilise the foreign exchange market were a prelude to lifting all curbs on capital outflows. The central bank has said the controls will be dropped by the end of July or early August. Foreign exchange dealers said today's announcement caused jitters in the market with foreign and local banks making heavy purchases of U.S. Dollars. They said the central bank sold about 30 mln U.S. Dlrs. Taiwan's stock market plunged a record 75.53 points to close at 1,803.08.