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Citibank bankers predict NT dollar's continued strength

The New Taiwan dollar will continue to strengthen against the greenback, whose weakness is sure to continue as a result of the US' dual-deficit plight, Citigroup bankers said yesterday in Taipei.

"[Our] five-year projection is at NT$27," Tony Stanton, an investment strategist and senior portfolio counselor at the Citigroup Private Bank, told a media briefing yesterday.

Stanton said that, on average, the NT dollar traded at NT$33 against the greenback last year, which the bank estimates will further appreciate by NT$1 to average at NT$32 this year.

Arun Motianey, director of investment research at the bank, tracked the NT dollar's fluctuation back through the past decades and said that the US dollar entered a downward cycle in 2002.

Long-term prediction

He endorsed Stanton's views and said that it is very likely that the NT dollar will hit the NT$27 level within the next five to seven years.

Stanton also said the NT dollar may rise by between 15 percent and 17 percent to level out at between NT$26.6 and NT$27.2 in just two years.

Motianey said that he thinks the euro will consolidate against a weaker greenback and trade at US$1.4 in this year.

Motianey said that there are reasons to be optimistic about global economic growth this year, despite an economic slowdown, since corporate balance sheets will be in their best shape in a decade, and that in turn should help improve the global labor market.

Warning

Motianey expressed concern, however, that a global economic recovery would eventually exact a price by building up the US' trade imbalances.

Such imbalances will be resolved through more savings, which may lead to potential recessions, he said.

Stanton expressed a bullish view toward equity investments in the energy, medical and pharmaceutical sectors as well as Asian stock markets, which he said are likely to benefit from China's economy and a possibly stronger Chinese yuan.
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