Central bank Governor Perng Fai-nan (彭淮南) said yesterday that consumer prices were his top concern when setting interest rates and that he saw no inflationary pressure on the horizon.
The nation’s top monetary regulator also said the New Taiwan dollar remained relatively stable compared with other currencies, despite gaining 2 percent in the third quarter.
“The central bank interest rate adjustments will be guided chiefly by domestic consumer prices in the coming six months,” Perng told a legislative hearing. “The bank is especially concerned about the fluctuation of the core consumer price index [CPI].”
The core CPI, which excludes items prone to volatile price movements such as energy, vegetables, fruit and fish, is used to project long-term inflation.
Perng said commodity prices were expected to remain stable over the next six months.
The bank has since February kept the rediscount rate at its record low of 1.25 percent.
Chinese Nationalist Party (KMT) Legislator Lai Shyh-bao (賴士葆) asked Perng if the central bank would consider hiking rates to rein in excess capital inflows that had inflated stock and property prices lately.
Perng attributed the bullish stock and property markets to technical rebounds after quarters of downward price correction. He said he would monitor real estate prices.
The governor said the local currency was relatively stable, although it was outperformed by the South Korean won, the euro, the Australian dollar and the New Zealand dollar this year.
However, “the NT dollar has a long-term competitive edge over the South Korean won because its pace of depreciation is lower,” Perng said.
The NT dollar gained 0.54 percent, or NT$0.176, to NT$32.2 yesterday on turnover of NT$2.208 billion (US$68.85 million), foreign exchange data showed.
Meanwhile, in a separate statement, the central bank rebutted a report in yesterday’s Chinese-language Commercial Times quoting it as saying that the NT dollar was “undervalued” and warning exporters to take “precautionary measures.”
“The exchange rate should be decided by market supply and demand,” the statement said. “The bank maintains order in the market in the case of irregular or seasonal factors causing excessive volatility.”
Tigr Cheng (程裕城), a strategist at Polaris Securities Co (寶來證券), said that according a statement the central bank prepared for lawmakers yesterday, the NT dollar’s real effective exchange rate — which factors in price level differences between trading partners — was more than 5 percent below its 36-month moving average.
That means the currency is “technically undervalued,” Cheng said.
In his report to lawmakers, Perng also said talks with China over the currency settlement mechanism were ongoing and he could not speculate on when the measure would be implemented, as the matter involves central banks on both sides. The talks are not tied to the signing of a memorandum of understanding over market access, he said.
Once a direct clearance regime is in place, exchange costs between the NT dollar and the yuan will be lowered from 1 percent to 0.25 percent, Perng said.
Yuan exchanges amounted to 10.1 billion yuan (US$1.48 billion) since the government allowed trading here in June last year.
The central bank said last week that branches of Taiwanese lenders in Hong Kong could accept yuan deposits.
ADDITIONAL REPORTING BY BLOOMBERG
DECOUPLING? In a sign of deeper US-China technology decoupling, Apple has held initial talks about using Baidu’s generative AI technology in its iPhones, the Wall Street Journal said China has introduced guidelines to phase out US microprocessors from Intel Corp and Advanced Micro Devices Inc (AMD) from government PCs and servers, the Financial Times reported yesterday. The procurement guidance also seeks to sideline Microsoft Corp’s Windows operating system and foreign-made database software in favor of domestic options, the report said. Chinese officials have begun following the guidelines, which were unveiled in December last year, the report said. They order government agencies above the township level to include criteria requiring “safe and reliable” processors and operating systems when making purchases, the newspaper said. The US has been aiming to boost domestic semiconductor
Nvidia Corp earned its US$2.2 trillion market cap by producing artificial intelligence (AI) chips that have become the lifeblood powering the new era of generative AI developers from start-ups to Microsoft Corp, OpenAI and Google parent Alphabet Inc. Almost as important to its hardware is the company’s nearly 20 years’ worth of computer code, which helps make competition with the company nearly impossible. More than 4 million global developers rely on Nvidia’s CUDA software platform to build AI and other apps. Now a coalition of tech companies that includes Qualcomm Inc, Google and Intel Corp plans to loosen Nvidia’s chokehold by going
ENERGY IMPACT: The electricity rate hike is expected to add about NT$4 billion to TSMC’s electricity bill a year and cut its annual earnings per share by about NT$0.154 Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) has left its long-term gross margin target unchanged despite the government deciding on Friday to raise electricity rates. One of the heaviest power consuming manufacturers in Taiwan, TSMC said it always respects the government’s energy policy and would continue to operate its fabs by making efforts in energy conservation. The chipmaker said it has left a long-term goal of more than 53 percent in gross margin unchanged. The Ministry of Economic Affairs concluded a power rate evaluation meeting on Friday, announcing electricity tariffs would go up by 11 percent on average to about NT$3.4518 per kilowatt-hour (kWh)
OPENING ADDRESS: The CEO is to give a speech on the future of high-performance computing and artificial intelligence at the trade show’s opening on June 3, TAITRA said Advanced Micro Devices Inc (AMD) chairperson and chief executive officer Lisa Su (蘇姿丰) is to deliver the opening keynote speech at Computex Taipei this year, the event’s organizer said in a statement yesterday. Su is to give a speech on the future of high-performance computing (HPC) in the artificial intelligence (AI) era to open Computex, one of the world’s largest computer and technology trade events, at 9:30am on June 3, the Taiwan External Trade Development Council (TAITRA) said. Su is to explore how AMD and the company’s strategic technology partners are pushing the limits of AI and HPC, from data centers to