Central bank governor Perng Fai-nan (彭淮南) yesterday denied media speculation that the NT dollar would be allowed to appreciate to help rein in rising imported inflation ahead of his scheduled briefing of the legislature’s finance committee today.
“The exchange rate is decided by supply and demand in the foreign exchange market. If the rate fluctuates to an undue extent because of accidental or unusual factors and it fails to reflect fundamental economic conditions, the central bank will intervene to maintain market stability,” Perng said in a statement.
Perng was responding to a report in the Chinese-language United Daily News yesterday, which cited a central bank report that hinted that the NT dollar could appreciate “by an appropriate margin” if global oil prices continued to rise.
Perng said the report submitted to the legislature on Monday did say the NT dollar appreciated in the first two months to help ease imported inflationary pressure, but it did not suggest a future trend for the currency’s exchange rate.
Imported inflation refers to domestic consumer price rises because of the increased cost of imported raw materials and goods.
Based on the report, the NT dollar’s exchange rate rose 8.34 percent year-on-year to NT$31.84 against the greenback last Friday. The figure was a 0.6 percent increase when compared with the rate at the end of last year, the central bank said.
“Since the global financial crisis, the exchange rate of the NT dollar against the US dollar has remained more stable than most other major currencies,” the report said, pointing out that the yen fluctuated the most against the greenback last year.
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