Several major business groups in Taiwan yesterday called for a stable New Taiwan dollar, complaining that the recent appreciation of the local currency against the US dollar had hurt the nation’s exports.
The General Chamber of Commerce of the Republic of China (ROC) (中華民國全國商業總會), the Chinese National Federation of Industries (中華民國全國工業總會) and the National Association of Small and Medium Enterprises (中小企業協會), among others, urged the central bank to take aggressive measures to alleviate the impact of the NT dollar’s appreciation.
The NT dollar yesterday rose NT$0.075 to close at NT$28.650 against the US dollar in Taipei trading. Since the end of August, the NT dollar has risen more than 10 percent against the greenback.
A stronger NT dollar has made Taiwan’s exports more expensive and affected the nation’s global competitiveness. Exports, in particular high-tech products, are the main driver of Taiwan’s economic growth.
General Chamber of Commerce of the ROC chairman Lawrence Chang (張平沼), said that because many of Taiwan’s high-tech companies are original design manufacturer (ODM) service providers, their profit margin is a very slim 3 percent to 4 percent.
Chang said this profit margin has been further squeezed by a rising NT dollar, and if the currency continues to rise, it would be hard for many small enterprises to survive.
He said the government should pay more attention to the problems of these exporters and try to prevent further suffering as a result of foreign exchange losses.
National Association of Small and Medium Enterprises chairman Roscher Lin (林秉彬) said it seems that the central bank, amid inflation concerns, has not been making much effort recently to stabilize the local currency.
Lin said the public has benefited little from a rising NT dollar in terms of purchasing power, but local exporters, in particular small and medium-sized enterprises, have been bruised by foreign exchange losses.
Even large companies have been hurt, despite their foreign exchange risk hedging measures, he said.
Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), the world’s largest contract chipmaker, has repeatedly said a rising NT dollar has affected the company’s bottom line. Whenever the local currency rises by 1 percent, TSMC’s operating margin falls 0.4 percentage points, the Hsinchu-based company said.
Lin urged the government not to sacrifice Taiwan’s exports, but rather to stabilize the NT dollar to maintain the nation’s competitive edge.
Chinese National Federation of Industries Tsai Lien-sheng (蔡練生) secretary-general said the central bank should slow the speed of currency appreciation to give local companies more time to adapt to the change.