Citigroup, the biggest US bank by assets, forecast the NT dollar to strengthen to less than NT$30 per US dollar by the end of the year, saying the local currency is still undervalued despite its recent gains against the greenback.
The NT dollar will trade at NT$30.576 to the US dollar by June 30, NT$30.275 by Sept. 30 and NT$29.8 by the end of this year, Cheng Cheng-mount (
"The stock market performance will likely remain a key factor driving near-term NT dollar movements," Cheng and Chen wrote in the note.
"But an undervalued NT dollar in REER [real effective exchange rate] suggests further room for NT dollar strengthening," they wrote.
The NT dollar closed 0.65 percent higher against the US dollar at NT$30.750 on Friday. The currency has risen 5.22 percent so far this year, on the back of continued capital inflows, the US dollar sell-off by exporters and the central bank's scaled-back intervention to help control inflation.
The local currency started to show clear signs of appreciation against the greenback in late January. Last month, foreign institutional investors bought a net NT$98.31 billion (US$3.2 billion) in Taiwan's stocks, following NT$34.42 billion net selling of local shares in January, Taiwan Stock Exchange's tallies showed.
For the first week of this month, foreign investors continued building up positions in local shares, buying a net NT$12.76 billion and prompting a 1.41-percent increase in the TAIEX, which closed at 8,531.38 on Friday, stock exchange data showed.
The 11.18 percent gain in the benchmark index since Feb. 1 and increased foreign inflows "have added momentum to the appreciation pressure on the NT dollar," Cheng and Chen wrote in the note.
The Citigroup economists said the central bank could be concerned with a sharp decrease in money supply growth since August last year, and therefore "content with a stronger NT dollar."
The latest inflation data released last week also supported their view that the NT dollar would be allowed further room for appreciation, they said.
The consumer price index (CPI) rose 3.89 percent last month year-on-year, up from a 2.96-percent growth in January, while the core CPI grew 2.65 percent last month to hover at near its nine-year high, the Directorate General of Budget, Accounting and Statistics reported last week.
Governor Perng Fai-nan (彭淮南) also said in a written report on Friday -- which will be submitted to the legislature's Finance Committee when he appears there today -- that the "NT dollar appreciation has helped ease imported inflation."
Barclays Capital economists Peter Redward and Puay Yeong Goh said in a report last week that the central bank is willing to tolerate NT dollar appreciation to cap imported inflation.
"In our view, the central bank would tolerate an appreciation in line with movement in the euro, Japanese yen and other regional currencies," Redward and Goh wrote in their report.
The central bank has reiterated several times recently that its stance toward the value of the NT dollar should be determined by market supply and demand.
Barclays Capital interpreted the central bank's market-decided stance as "allowing the NT dollar to continue to appreciate given the strong portfolio-inflows-driven demand for the NT dollar," Redward and Goh wrote.
Barclays Capital has revised their forecast for the NT dollar exchange rate to NT$30.0 from NT$31.5 against the US dollar by the end of the year, with "significant downside" if the NT$30 barrier is broken, they said.
While an undervalued NT dollar implies upside potential in the near to medium-term, Citigroup economists said they didn't think the NT dollar appreciation would undercut the nation's export competitiveness.
"Modest appreciation of the NT dollar over time will unlikely dampen Taiwan's export competitiveness, particularly if Taiwan can do a better job of controlling inflation than its major trading partners," Cheng and Chen said.
ASML Holding NV’s new advanced chip machines have a daunting price tag, said Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), one of the Dutch company’s biggest clients. “The cost is very high,” TSMC senior vice president Kevin Zhang (張曉強) said at a technology symposium in Amsterdam on Tuesday, referring to ASML’s latest system known as high-NA extreme ultraviolet (EUV). “I like the high-NA EUV’s capability, but I don’t like the sticker price,” Zhang said. ASML’s new chip machine can imprint semiconductors with lines that are just 8 nanometers thick — 1.7 times smaller than the previous generation. The machines cost 350 million euros (US$378 million)
Apple Inc has closed in on an agreement with OpenAI to use the start-up’s technology on the iPhone, part of a broader push to bring artificial intelligence (AI) features to its devices, people familiar with the matter said. The two sides have been finalizing terms for a pact to use ChatGPT features in Apple’s iOS 18, the next iPhone operating system, said the people, who asked not to be identified because the situation is private. Apple also has held talks with Alphabet Inc’s Google about licensing its Gemini chatbot. Those discussions have not led to an agreement, but are ongoing. An OpenAI
INSATIABLE: Almost all AI innovators are working with the chipmaker to address the rapidly growing AI-related demand for energy-efficient computing power, the CEO said Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) yesterday reported about 60 percent annual growth in revenue for last month, benefiting from rapidly growing demand for artificial intelligence (AI) and high-performance computing applications. Revenue last month expanded to NT$236.02 billion (US$7.28 billion), compared with NT$147.9 billion in April last year, the second-highest level in company history, TSMC said in a statement. On a monthly basis, revenue surged 20.9 percent, from NT$195.21 billion in March. As AI-related applications continue to show strong growth, TSMC expects revenue to expand about 27.6 percent year-on-year during the current quarter to between US$19.6 billion and US$20.4 billion. That would
‘FULL SUPPORT’: Kumamoto Governor Takashi Kimura said he hopes more companies would settle in the prefecture to create an area similar to Taiwan’s Hsinchu Science Park The newly elected governor of Japan’s Kumamoto Prefecture said he is ready to ensure wide-ranging support to woo Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) to build its third Japanese chip factory there. Concerns of groundwater shortages when TSMC’s two plants begin operations in the prefecture’s Kikuyo have spurred discussions about the possibility of tapping unused dam water, Kumamoto Governor Takashi Kimura said in an interview on Saturday. While Kimura said talks about a third plant have yet to occur, Bloomberg had reported TSMC is already considering its third Japanese fab — also in Kumamoto — which would make more advanced chips. “We are