Directorate-General of Budget, Accounting and Statistics (DGBAS) Minister Shih Su-mei (石素梅) yesterday said that the recent depreciation of the New Taiwan dollar versus the greenback may benefit Taiwan’s GDP growth.
Every NT$1 that the local currency falls against the US dollar could raise Taiwan’s GDP by 0.18 percentage points, Shih said in response to questions by Democratic Progressive Party (DPP) Legislator Hsueh Ling (薛凌) about the impact of depreciation.
However, every NT$1 fall against the greenback would also drag the growth of the nation’s consumer price index (CPI) down by 0.19 percentage points, Shih said, adding that the government would take steps to stabilize consumer prices.
The Taiwan dollar and other regional currencies seem to have lost their luster in recent sessions, amid expectations that interest rates in the US will move higher on the back of improving economic data, which would make US dollar-denominated assets more attractive, according to foreign currency traders.
The US’ second-quarter economic growth of 4.6 percent released last month prompted many traders to believe that the US Federal Reserve would begin an interest rate hike cycle sooner than the market expected, traders said.
On Monday, the NT dollar fell to its lowest level in six months, dropping to NT$30.502 on the local foreign exchange market.
The local unit yesterday rose NT$0.03, or 0.11 percent, to close at NT$30.46, in line with the movements of regional currencies, as traders took cues from disappointing economic data released in Washington overnight to cut their greenback holdings.
The economy is forecast to grow 3.41 percent this year and expand by 3.51 percent next year, the DGBAS said in August.
Shih remained confident that GDP would reach the DGBAS’ goal this year, attributing sluggish economic momentum over the past few years to the negative impact of the 2008 global financial crisis.
However, DPP Legislator Hsu Tain-tsair (許添財) yesterday said that the economy has not been strong since President Ma Ying-jeou (馬英九) took office in 2008, as Taiwan registered an average of 3.05 percent growth in GDP over the past six years.
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