A European brokerage on Sunday said that the New Taiwan dollar could continue to trend lower and fall to NT$34.5 against the US dollar on expectations that the central bank will further ease monetary policy to boost the economy.
The NT dollar yesterday closed down NT$0.061 to NT$33.813 versus the US dollar.
With the central bank’s monetary policy likely to be further eased, the NT dollar is expected to come under more downward pressure and fall further down the road, the brokerage said in a research note.
The brokerage said the nation is currently feeling little inflationary pressure, which has given the central bank to have more room to cut interest rates after rate cuts in each of the last two quarters.
By law, the names of foreign brokerages cannot be reported when they give price forecasts for specific stocks.
Government forecasts have estimated that the consumer price index is likely to increase this year 0.84 percent year-on-year after a 0.31 percent decline last year due to a plunge in fuel prices.
The central bank last month lowered its key interest rates by 0.125 percentage points, bringing the discount rate to 1.625 percent.
The government has lowered its forecast for GDP growth this year to 2.32 percent from an earlier estimate of 2.7 percent.
The brokerage said president-elect Tsai Ing-wen (蔡英文) could try to reduce the nation’s economic dependence on China by seeking to forge closer trade relations with other countries, and Japan would likely be on the top of Tsai’s list.
According to the Ministry of Finance, China accounted for 39 percent of the nation’s total exports, ranking as the largest buyer of Taiwanese-made goods last year.
The brokerage also said that because Tsai has proposed building a large number of social housing units as part of her social welfare policies, housing supply is expected to increase, pushing down home prices in the future.
Another brokerage headquartered in Asia said Tsai’s government should try to improve investors’ confidence to avoid an exodus of foreign funds, which is the last thing the equity market wants to see.
It said that it has set a target for the TAIEX to challenge 8,800 points by the end of this year.
Since the beginning of the year, TAIEX has lost nearly 7 percent amid concerns over volatility in global financial markets and a weakening Chinese economy.
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