US pushes for NT$ revaluation

Taiwan is facing pressure to revaluate its currency, as the issue was raised by the US at a bilateral meeting during the APEC finance ministers' gathering held over the weekend in Chile, Minis-try of Finance officials said yesterday.

The US says the New Taiwan dollar has been undervalued, hinting that the currency's value cannot fully reflect the nation's current account surplus, Deputy Minister of Finance Gordon Chen (陳樹) told a press conference.

Taiwan saw a US$10.99 billion current account surplus for the year's first half, and a deficit of US$48 million in the capital account over the same time period, according to figures provided by the nation's central bank.

"The US finance deputy secretary, John Taylor, expressed concern over the exchange rate of NT dollar against the US dollar," Chen said.

Taylor brought up the issue during a Taiwan-US bilateral meeting on Sept. 3, he said.

In response, Chen cited Liang Fa-chin (梁發進), deputy governor of the Central Bank of China (CBC), who also attended the meeting, as saying that the balance of goods in the current account is not the only factor in the balance of payments.

Liang said that the nation still saw its capital account in the red and that the nation's currency value should reflect this situation accurately, for Taiwan, as a country that respects free market mechanisms in principle, did not exert much artificial influence on the exchange rate.

The US representatives did not push the point further after Liang's explanation, Chen said.

The NT dollar yesterday rose by NT$0.004 to close at NT$33.929 against the US dollar, stimulated by the appreciation of the Japan-ese yen and foreign investors' net purchases of NT$3.24 billion on the Taiwan Stock Exchange market.

Chen also said he had a private talk on the sidelines of the APEC meeting with an undisclosed Chinese deputy finance minister about the possibility of both sides conducting financial supervisory mechanisms across the Taiwan Strait.

A number of the nation's financial institutions, such as insurers, banks and securities houses, have set up subsidiaries and offices in China, and the amended Statute Governing the Relations Between the People of the Taiwan Area and the Mainland Area (兩岸人民關係條 例) allows Chinese banks to establish offices with certain condi-tions, Chen said.

Under the circumstances, if there could be some cooperative mechanism, such as a memorandum of understanding or better exchange models, this would help to enhance cross-strait financial supervision, he said.

However, this would not be a smooth process, as Chinese laws stipulate that the bilateral financial supervisory platform needs to be set up under formal and official relations, Chen said.

The Taiwanese delegation led by Finance Minister Lin Chuan (林全) had bilateral meetings with Australia, Canada, Chile, the Philippines, South Korea and the US on issues including terrorism, money laundering, financial supervision and foreign exchange rates.