Thu, Mar 02, 2017 - Page 12 News List

Central bank governor defends monetary policy

By Ted Chen  /  Staff reporter

Central bank Governor Perng Fai-nan (彭淮南) yesterday defended the nation’s monetary policy ahead of the release of a US Department of the Treasury report on Taiwan’s main trading partners.

In a report that is to be reviewed by lawmakers today, Perng said that the central bank’s primary objective is to stabilize the New Taiwan dollar and that its policies are not directed at achieving a trade advantage.

Perng said that the US’ trade deficit with Taiwan last year amounted to US$12.37 billion, representing just 1.8 percent of the US’ overall trade deficit, and that the figure is lower than the US$15.05 recorded in 2015.

In addition, Taiwan’s goods trade surplus with the US was US$4.92 billion, lower than 2015’s US$5.35 billion, Perng said in the report.

The figures do not take into account the huge intellectual property licensing fees paid by Taiwanese manufacturers to US companies, Perng said.

Perng said the US trade deficit with Taiwan would be diminished if the US$5.26 billion in licensing fees paid by Taiwanese firms to US counterparts was included in cross-border trade tallies.

“The inclusion of trade in services [in the figures] would provide a clearer picture of trade between the two sides,” Perng said in the report.

Products made by Taiwanese firms rely heavily on US patents, such as those connected with manufacturing processes, the report said.

In addition, many US products enter Taiwan by way of a third nation and such calculations are not included in official US-Taiwan trade figures, Perng said.

He said that with the inclusion of trade-in-services figures, the US trade deficit with Taiwan last year would narrow to about US$3.2 billion.

In addition, the NT dollar’s nominal effective exchange rate has been on the rise since the end of 2015, and has gained 7.7 percent since Feb. 20, compared with an 8.3 percent rise in the yen and a 6.4 percent tumble in the yuan over the same period, Perng said, citing data from the Bank of International Settlements.

The data showed that the NT dollar had strengthened by 3.6 percent since the end of last year.

Meanwhile, Taiwan is still on the US Department of the Treasury’s currency monitoring list, which is updated twice a year in April and October.

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