The Financial Supervisory Commission (FSC) may extend the deadline of its blanket deposit guarantee to the end of next year in a bid to stabilize the markets, the Chinese-language Commercial Times reported yesterday.
The proposal, which recommends that the commission extend its blanket deposit guarantee until the end of next year, was submitted by bank executives during their meetings with commission chairman Sean Chen (陳冲) prior to the Lunar New Year holiday, the report said.
Citing an unidentified official, the report said the commission began to study the feasibility of the proposal on Sunday and is expected to come up with a final decision by June at the latest.
The official said the commission is in discussions with the Central Deposit Insurance Corp after learning that most Asian governments, including Hong Kong, Singapore, Malaysia and Thailand, “are providing a blanket guarantee for two years until the end of next year.”
He added that many European countries have set no specific deadlines for their blanket deposit guarantees, with their financial regulators closely watching the future development of the financial markets.
He also said that the commission would weigh up the potential impact on the banking system of clients of small and medium-sized banks who may rush to transfer their deposits to larger banks in the second half of this year before the guarantee expires.
Nevertheless, the local financial market is in no immediate danger of collapsing, the official said, even though the government announced the blanket guarantee on all bank deposits in October.
The commission said it would also discuss the proposal with the central bank before submitting a plan to the Cabinet for approval.
If the deadline is not extended, the government would revert to guaranteeing deposits of up to NT$1.5 million next year.
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
PRESSURE EXPECTED: The appreciation of the NT dollar reflected expectations that Washington would press Taiwan to boost its currency against the US dollar, dealers said Taiwan’s export-oriented semiconductor and auto part manufacturers are expecting their margins to be affected by large foreign exchange losses as the New Taiwan dollar continued to appreciate sharply against the US dollar yesterday. Among major semiconductor manufacturers, ASE Technology Holding Co (日月光), the world’s largest integrated circuit (IC) packaging and testing services provider, said that whenever the NT dollar rises NT$1 against the greenback, its gross margin is cut by about 1.5 percent. The NT dollar traded as strong as NT$29.59 per US dollar before trimming gains to close NT$0.919, or 2.96 percent, higher at NT$30.145 yesterday in Taipei trading
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