The central bank yesterday said it would continue a strategy to persuade local lenders to be more cautious on mortgage lending, while keeping the nation’s benchmark interest rates unchanged for the 10th straight quarter.
The central bank met local market expectations by keeping its discount rate unchanged at 1.875 percent, with the collateralized and unsecured loan rates at 2.25 percent and 4.125 percent respectively, citing the current mild pickup in the domestic economy and slowing pressure on consumer prices.
However, bank Governor Perng Fai-nan (彭淮南) voiced concern that some banks may have been too reckless in extending loans for industrial zone projects, which may raise those banks’ financial risks and spark speculation in the housing market.
Perng said the central bank has asked the Bank of Taiwan (台灣銀行) and seven other domestic banks that have a large exposure to mortgage lending to be more careful in evaluating such projects.
The bank will also continue its scrutiny of local banks, carefully monitoring their risk-control measures, Perng added.
Asked about monetary policy, Perng said that even though consumer prices were steady, the central bank has limited room to raise interest rates if the economic and manufacturing industries continue to lag behind expectations.
“The bank [currently] maintains a moderately easy monetary policy,” Perng told a press conference.
The central bank’s decision to keep its M2 money supply growth target for next year unchanged is an indication that the bank would maintain its accommodative monetary policy stance, as well as interbank liquidity conditions, at existing levels.
The target growth zone for M2 is set between 2.5 percent and 6.5 percent for next year, central bank statistics showed.
Hong Kong-based ANZ Research senior economist Raymond Yeung (楊宇霆) said Taiwan should not lift the base rate until December next year.
“As the low inflationary regime will extend into next year, the central bank will continue to maintain their wait-and-see attitude,” Yeung said in a research note.
As the central bank is likely to link its interest rate policy to the US dollar’s movement, interest rates are expected to stay low most of the time next year, he said.
The New Taiwan dollar fell to a four-month low of NT$30.06 versus the greenback yesterday, shedding NT$0.013 on the Taipei Foreign Exchange Market. It marked the 13th straight session it depreciated against the US dollar.
Perng said the continuous depreciation of the NT dollar reflected a slowdown in net inflows by foreign portfolio investors, as many are on a break due to the Christmas holiday.
“It is a demand and supply issue,” he said.
Polytronics Technology Corp (聚鼎科技) yesterday announced that it is buying Henkel AG’s thermal clad dielectric material (TCLAD) business division for US$26 million as the Taiwanese firm aims to improve its technology, product portfolio and revenue performance. Polytronics, headquartered in the Hsinchu Science Park (新竹科學園區), is a supplier of protection components and heat dissipation materials. The firm entered the metallic heat-dissipation substrate market in 2007 and developed a unique solventless production process. Its board of directors approved signing an agreement with Henkel to acquire the German chemical firm’s TCLAD division in the US. The purchase includes all assets and business interests, including equipment,
SIZE MATTERS: Medium-sized hotels that do not have the support of parent groups are more vulnerable and are forced to take action, a REPro Knight Frank researcher said About 50 hotels across Taiwan are seeking to exit the market as they succumb to the bleak business outlook amid international travel restrictions imposed to combat the COVID-19 pandemic. Yomi Hotel (優美飯店) on Minsheng E Road, Sec 1, in Taipei is seeking to transfer ownership with an asking price of NT$950 million (US$32.15 million) and a pledge for a lease contract that guarantees a 3 percent return. The budget hotel, with room rates that start from NT$1,400 per night, maintains normal operations, but has been struggling since March, when the government placed restrictions on inbound and outbound travel. Occupancy rates for hotels in
With the US dollar expected to weaken in the next 12 months due to near-zero interest rates, investors should consider purchasing US corporate bonds, Standard Chartered Bank Taiwan Ltd (渣打台灣銀行) said on Thursday. The bank said that the US Federal Reserve since last month has been buying bonds issued by US companies to curb default rates. The US dollar is forecast to be weaker against the pound, the euro and the yen, as well as the Canadian dollar, the Swedish krona and the Swiss franc, as the greenback lacks high investment returns after the Fed in March slashed the benchmark interest rate
A Bollywood actor’s face tattooed on his arm, Sandeep Bacche’s devotion shocks few in India where stars enjoy semi-divine status, but even there the hallowed silver screen might be losing its shine to streaming services and pandemic fears. “Whenever things get better and theaters begin operations, I will watch three movies a day for sure just as a way to celebrate,” said the Mumbai rickshaw driver, who is recovering from the virus himself. However, others might not join the party. With cinemas shut for months due to a COVID-19 lockdown, and little prospect they will reopen soon, frustrated Bollywood producers have turned to