Lehman Brothers predict NT dollar will strengthen

Lehman Brothers Bank predicted yesterday that Asian currencies, including the New Taiwan dollar, will largely pick up in value against the US dollar this year.

Speaking a world economic meeting in Taipei, the bank's leading economists forecast that the US dollar will continue to weaken in the future due to the country's huge federal and trade deficits and a low savings rate.

Such a situation, they said, will in turn prop up the values of Asian currencies this year rather than the euro, which surged sharply last year.

They forecast that the NT dollar will strengthen the most against the greenback by 21 percent in the months to come on the grounds that the local currency appreciated less than the Japanese yen and the South Korean won last year.

The NT dollar rose NT$0.099 to close at NT$31.699 in Taipei. A total of US$767 million changed hands during the day's trading.

The local currency has appreciated against the US unit by more than 6 percent over the past year.

The Lehman Brothers Bank economists also contended yesterday that Chinese yuan will ease its peg to the US dollar to gain in value in a range between 5 percent and 10 percent in the initial stage.

At the end of this year, the yen and the won will climb to Y90 and to 900 to the US dollar, respectively, they said.

Meanwhile, the economists estimated that Taiwan's GDP will grow by 5 percent this year. But they pointed out that Taiwan's fragile relations with China and a bubble property market that might burst are likely to hinder its economy.