A weakening US dollar is sure to trigger the further appreciation of the NT dollar, which is expected to rise to NT$31.97 against the greenback in the fourth quarter, the Chung-Hua Institution for Economic Research (CIER,
The local currency yesterday rose NT$0.017 against the US dollar to close at NT$33.023 on the Taipei foreign exchange market. Turnover totalled US$410 million, down from the previous day's US$501 million.
CIER yesterday forecast the local currency to trade at NT$32.87 against the greenback in the third quarter, reaching an averaged exchange rate of NT$33.58 for this year and NT$31.27 next year.
"A critical point has arrived to put the US dollar on a downward slope," said Wang Lee-rong (
Wang added that, with a trade deficit's expansion of five percent this year, the US' recent accounting scandals have further dampened public confidence in the superpower's economic outlook.
Hu Chung-ying (胡仲英), economic research director at the Cabinet-level Council for Economic Planning and Development, said that the Bush administration may not allow the US dollar to continue to depreciate against the world's major currencies. In addition, the US and Japan may join forces to interfere with the foreign exchange rate in order to stem the greenback's decline, he added.
As the local currency's gains have not yet been as strong as Taiwan's regional exporting rivals, CIER's Wang said that the nation still maintains substantial export competitiveness.
One day after Academia Sinica raised this year's GDP forecast to 3.24 percent, CIER yesterday also revised upward its forecast from the previous 2.67 percent to 2.92 percent.
CIER expected a GDP growth rate of 4.01 percent in the third quarter, 4.59 percent in the fourth quarter and an averaged GDP growth rate of 3.95 percent in 2003.
"In the first quarter, Taiwan outshined its Asian competitors in exports and completely the economic slump bottomed out," CIER's president Mai Chao-cheng (
Beginning in the second quarter, Ma said that a mild recovery in the nation's foreign trade and private consumption is foreseeable and should further bolster a rosy economic outlook.
Citing a worse-case scenario, Ma said that if a weaker greenback triggers the NT dollar to appreciate by 10 percent by year's end, the nation's GDP growth would drop to an estimated 2.81 percent. If the NT dollar's appreciation reaches 25 percent next year, the 2003 GDP forecast would be revised downward to only 1.77 percent, he said.
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