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Legislator says US moves may boost local currency

The government should do its utmost to stabilize the local foreign exchange market now that the US has vowed to fight global terrorism, a lawmaker said yesterday.

New Party Legislator Lai Shyh-bao (賴士葆) said at a news conference that the US decision to launch a sweeping, sustained war on terrorism would further hurt Taiwan's already faltering economy.

Once the US really begins military retaliation for the Sept. 11 terrorist attacks on symbols of US power, Lai said, the NT dollar is very likely to appreciate against the greenback.

"As dramatic currency appreciation in a short period of time tends to pose problems for the business and industrial sector, the [central bank] should intervene to maintain stability of the domestic foreign exchange market once the NT dollar's value rises over NT$33.5 against the US dollar," Lai said.

As for the stock market, Lai said the current downward trend is not expected to reverse itself for the time being. "Therefore, the government should refrain from taking any measure to prop up the local bourse and let the market mechanism to work on its own," he said.

Although state-run funds have been buying stocks, such moves have been futile, he said.
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