The central bank yesterday defended its foreign currency exchange operations, saying that while the New Taiwan dollar weakened 5.57 percent against the US dollar last year, it held relatively steady against other foreign currencies.
“It is not adequate to only take into account the value of the NT dollar against the US dollar when judging the movement of the currency,” the central bank said in a statement on its Web site.
The greenback is no doubt a major currency, but the NT dollar’s performance against the euro and the Japanese yen are also important as Taiwan has trade and capital transactions all over the world, the bank said in the statement.
The NT dollar declined 5.57 percent against the US currency last year, but the yen dropped by 12.24 percent and the euro by 11.83 percent, according to the central bank’s tallies.
The NT dollar strengthened 7.59 percent against the yen and 7.1 percent against the euro, the bank said.
The nominal effective exchange rate (NEER) of the NT dollar dropped 0.37 percent against major trading partners, including the US, Europe and Japan, the bank said, suggesting that the value of NT dollar remains stable.
The NEER represents the relative value of a home country’s currency compared with the other major currencies being traded. A higher NEER coefficient means that the home country’s currency is worth more than an imported currency, and a lower coefficient means that the home currency would usually be worth less than the imported currency.
Some market watchers have said that the slowdown in the Chinese economy and the US central bank’s monetary policy were the main reasons behind the fall of the NT dollar last year, while other commentators have suggested a currency war in the region aimed at boosting the competitiveness of exports and countering the threat of deflation.
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