The dispute between central bank Governor Perng Fai-nan (彭淮南) and Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) chairman Morris Chang (張忠謀) over the New Taiwan dollar’s exchange rate has heated up again.
However, Perng has become more determined to defend the bank’s policy, saying yesterday that maintaining dynamic stability of the NT dollar’s rate would benefit most Taiwanese companies, not just a few.
On Saturday, Chang told reporters that the government should let the NT dollar depreciate to strengthen Taiwanese companies’ profitability, which will help raise employees’ earnings and increase their consumption.
Chang’s remarks became one of the main topics discussed between Perng and lawmakers during a question-and-answer session at the legislature’s Finance Committee yesterday.
Perng said that the central bank’s currency policy has to balance serving exporters and importers by maintaining a steady exchange rate.
“It is impossible for a currency rate to satisfy exporters and importers at the same time,” he said.
Perng said the exchange rate cannot not be the only issue affecting an exporter’s profitability, adding that he never heard officials at MediaTek Inc (聯發科) — the nation’s biggest handset chip supplier — calling for currency depreciation.
Perng also praised Giant Manufacturing Co (巨大機械), one of Taiwan’s leading bicycle makers, as having a successful business model with no need for a weaker NT dollar, as demand for its products remains strong and their prices rise.
Citing data from the Bank for International Settlements (BIS), Perng said the real effective exchange rate (REER) of the NT dollar was 2.7 percentage points lower than the South Korea won, proving the high competitiveness of the NT dollar.
The won is the base currency used by TSMC’s major competitor — Samsung Group — so the NT dollar’s current value should put TSMC in a good position.
Perng denied some exporters’ claims that the exchange rate is the primary factor affecting a nation’s exports.
As of Friday last week, the NT dollar had depreciated 3.51 percent against the yuan since the end of last year.
However, Taiwan’s exports of flat panels to China showed a NT$450 million (US$15.26 million) decline last month from a year earlier, which was evidence that the exchange rate is only one factor affecting exports, Perng said.
“The attractiveness and value of the products is the key deciding whether a company can sell its products,” he said.