Tue, Feb 05, 2013 - Page 14 News List

Keeping Perng at the central bank suggests stability

Bloomberg

The government’s re-appointment of its top central banker to a fourth term will likely mean continued stability for the country’s currency and protection for exporters.

The decision, announced late on Friday last week, came three days after central bank Governor Perng Fai-nan (彭淮南) reiterated that the bank would intervene to offset any “disorderly movements” in the market for the New Taiwan dollar.

“Perng’s re-appointment is a big help in maintaining stability in Taiwan’s financial environment,” Yuanta Securities Investment Trust Co (元大投信) president Liu Tsung-sheng (劉宗聖) said. “Now that the uncertainty is gone before the Lunar New Year holiday, we’re bullish about Taiwan stocks.”

The central bank has sold the NT dollar near the close on most days throughout the past 10 months, traders said. Under Perng’s 15 years at the helm, the NT dollar has gained about 10 percent against its US counterpart, less than half the 22 percent appreciation of Asian currencies, according to data compiled by Bloomberg.

Perng took the job in February 1998. While he led Taiwan through difficulties and helped stabilize the currency, his policies have contributed to a surge in real-estate prices, said Wu Hui-lin (吳惠林), a research fellow at Chung-hua Institution for Economic Research (CIER, 中華經濟研究院).

“The central bank’s currency-stabilizing policy has released a lot of money into the financial system over the years, contributing to the build-up of a property bubble,” Wu said.

For example, Taipei housing prices have more than doubled since 2000 and reached record-high levels last year, Sinyi Realty Co (信義房屋) said.

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