Thu, May 13, 2004 - Page 11 News List

Central bank official downplays greenback's rise

By Joyce Huang  /  STAFF REPORTER

Central bank deputy governor Hsu Yi-hsiung (徐義雄) told legislators yesterday that he believes the US dollar's recent appreciation against major currencies would be a short-term uptick.

"There's little reason to believe that the greenback would continue to climb given its current economic climate," Hsu told the legislature's Finance Committee, responding to lawmakers' concerns that market views of a weaker US dollar may be soon revised.

The New Taiwan dollar's recent depreciation against the greenback was, therefore, not only in line with the general weakness of Asian currencies, but also reflected the US dollar's appreciation, he said.

For example, the US dollar was trading at ?112.62 on the Tokyo foreign exchange market at 3pm yesterday, down ?0.70 from late Tuesday.

Hsu also dismissed worries that the NT dollar's depreciation has anything to do with a hurried outflow of overseas capital including the share-dumping by foreign investors.

With the TAIEX rebounding and the yen's appreciation, the NT dollar yesterday turned strong against the greenback, gaining NT$0.142 to close at NT$33.505 on the Taipei foreign exchange market.

With a turnover of US$750 million yesterday, the unit was traded against the US dollar between NT$33.647 and NT$33.490 during the session.

Speculation that foreign investors are abandoning the local stock market -- with NT$80 billion worth of Taiwanese shares having been sold in the past 10 days -- is believed to have caused the recent depreciation in the local currency.

Hsu said that the outward remittances of around US$1.5 billion by foreign investors recently is "relatively reasonable."

Hsu said that he had not noticed speculators trying to manipulate the local currency, but the central bank would step in to moderate the NT dollar's irrational fluctuation triggered by the movement of foreign capital if necessary..

Democratic Progressive Party Legislator Chen Mao-nan (陳茂男) asked Hsu what the reasonable range would be for the NT dollar to level at but he shrugged off the question, saying the market would decide.

He also said that the central bank would closely monitor the currency's movement in order to maintain the nation's export competitiveness against other Asian trade competitors, including South Korea and Singapore.

Meanwhile, Wu Tang-chieh (吳當傑), former vice chairman of the Securities and Futures Commission, yesterday expressed his confidence in the TAIEX. He said the index may slowly rise since MSCI has decided to add three Taiwanese high-tech companies into its index list.

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