Economists are split as to whether Taiwan’s central bank will add to its yearlong easing cycle at today’s meeting, a Bloomberg survey showed.
The monetary policy board, led by central bank Governor Perng Fai-nan (彭淮南), is expected to hold the key interest rate at 1.375 percent, according to 14 out of 26 economists surveyed between Sept. 22 and Tuesday. The other 12 forecast a reduction to 1.25 percent in what would be the fifth reduction since September last year.
Stronger-than-expected sales for Apple Inc’s new iPhone 7 are supporting electronics companies, while rising commodity prices benefit traditional industries like petrochemicals makers, said Yen Chen-hui (顏承暉), a Taipei-based strategist at Yuanta-Polaris Research Institute (元大寶華綜經院).
This quarter, there is “no need” for the central bank to help exporters by cutting the interest rate and depreciating the New Taiwan dollar, Yen said.
Export orders jumped 8.3 percent last month from a year earlier — the first expansion in 17 months — on rising demand for the components inside handheld devices as well as electrical machinery. Industrial production in the same month rose 7.74 percent, in part on electronics and also on rising oil prices.
On the other side of the split projection are those who see a more prolonged L-shaped recovery for the global economy. The effect of the iPhone might not last beyond one or two quarters, said Ma Tieying (馬鐵英), a Singapore-based economist at DBS Bank.
In the meantime, with the US holding off on raising rates, Taiwan can enact a cut without having to worry too much about capital outflows, Ma said.
The government last month revised its GDP growth estimate for this year to a 1.22 percent expansion, up from 1.06 percent.
The US dollar was trading at NT$29.7 at 10am today on the Taipei Foreign Exchange, as the New Taiwan dollar gained NT$1.364 from the previous close last week. The NT dollar continued to rise today, after surging 3.07 percent on Friday. After opening at NT$30.91, the NT dollar gained more than NT$1 in just 15 minutes, briefly passing the NT$30 mark. Before the US Department of the Treasury's semi-annual currency report came out, expectations that the NT dollar would keep rising were already building. The NT dollar on Friday closed at NT$31.064, up by NT$0.953 — a 3.07 percent single-day gain. Today,
‘SHORT TERM’: The local currency would likely remain strong in the near term, driven by anticipated US trade pressure, capital inflows and expectations of a US Fed rate cut The US dollar is expected to fall below NT$30 in the near term, as traders anticipate increased pressure from Washington for Taiwan to allow the New Taiwan dollar to appreciate, Cathay United Bank (國泰世華銀行) chief economist Lin Chi-chao (林啟超) said. Following a sharp drop in the greenback against the NT dollar on Friday, Lin told the Central News Agency that the local currency is likely to remain strong in the short term, driven in part by market psychology surrounding anticipated US policy pressure. On Friday, the US dollar fell NT$0.953, or 3.07 percent, closing at NT$31.064 — its lowest level since Jan.
The New Taiwan dollar and Taiwanese stocks surged on signs that trade tensions between the world’s top two economies might start easing and as US tech earnings boosted the outlook of the nation’s semiconductor exports. The NT dollar strengthened as much as 3.8 percent versus the US dollar to 30.815, the biggest intraday gain since January 2011, closing at NT$31.064. The benchmark TAIEX jumped 2.73 percent to outperform the region’s equity gauges. Outlook for global trade improved after China said it is assessing possible trade talks with the US, providing a boost for the nation’s currency and shares. As the NT dollar
The Financial Supervisory Commission (FSC) yesterday met with some of the nation’s largest insurance companies as a skyrocketing New Taiwan dollar piles pressure on their hundreds of billions of dollars in US bond investments. The commission has asked some life insurance firms, among the biggest Asian holders of US debt, to discuss how the rapidly strengthening NT dollar has impacted their operations, people familiar with the matter said. The meeting took place as the NT dollar jumped as much as 5 percent yesterday, its biggest intraday gain in more than three decades. The local currency surged as exporters rushed to
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