The New Taiwan dollar was down NT$0.036 to close at NT$29.564 against the US dollar yesterday, shrugging off appreciation speculation following Beijing’s announcement it would double the size of the yuan’s trading on Saturday.
Economists expect China’s new currency policy to have little impact on the -movement of the local currency this year.
“China’s move will not raise the appreciating trend for the NT dollar and other Asian currencies,” Yang Chia-yen (楊家彥), a director at the Taiwan Institute of Economic Research (台灣經濟研究院), said by telephone.
As momentum on the greenback may remain relatively solid in the near future, the change will not add fresh pressure on Asia’s major currencies to appreciate, Yang said.
Taipei-based Polaris Research Institute (寶華綜合經濟研究院) president Liang Kuo-yuan (梁國源) shared Yang’s view.
“China picked an appropriate time to announce the move,” Liang said.
As China’s economy is less attractive at the moment, the increase in the yuan’s trading band may not bring too much “hot money” into Asia this year, Liang said
Both Yang and Liang said the NT dollar would retain its modest-appreciation against the US dollar this year.
Recent rising consumer prices in Taiwan may weigh on the central bank’s attitude toward the local currency, an indication that the bank may be more tolerant of the NT dollar’s appreciation versus the greenback this year.
However, Paul Mackel, head of Asia currency research at HSBC Global Research, said although the Chinese yuan’s move does not have a direct impact on the exchange rate, it will cause other Asian currencies to trade with greater volatility.
In the near term, the NT dollar, Malaysia’s ringgit and the South Korean won seem most likely to trade in wider ranges against the US dollar, given their correlations with the yuan, Mackel said in a research report.
However, that the Chinese yuan is moving much closer to equilibrium value indicated that it would have less of an influence on the broader directionality of the rest of Asia, Mackel said, adding that Asian currencies might trade with less uniformity in the future.