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.
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