The central bank might soon take action to rein in property price hikes and stabilize the financial system, as flush liquidity, hot money inflows and capital repatriation have pushed money supply above its target zone, Australia and New Zealand Banking Group (ANZ) said yesterday.
“We believe the central bank will begin to focus on financial stability and consider mopping up excessive liquidity and tightening property lending via macro-prudential measures,” ANZ said.
The central bank on Tuesday reported that the nations’ broad money supply measure of M2 — cash, cash equivalents, time deposits, foreign-currency deposits and mutual funds — rose 7.05 percent year-on-year last month.
The bank has set the target zone at a range of 2.5 to 6.5 percent.
The narrow measure of M1B — cash and cash equivalents — grew 12.85 percent, indicating ample liquidity in the banking system, it said.
FUND REPATRIATION
Taiwan has attracted strong global funds and corporate capital repatriation from offshore markets, helped by a stable economic recovery and positive export outlook, ANZ said.
“Strong portfolio flows and flush liquidity present immediate challenges to policies, affecting interest rates, the foreign exchange rate and the likelihood of asset-price bubbles,” it said
The overnight interest rate has been sitting below 0.08 percent and the 10-year government bond sank to a historic low of 0.27 percent this month, ANZ said.
Land and construction financing last month rose by NT$41.8 billion (US$1.45 billion) to NT$2.37 trillion, reflecting active efforts by developers and builders to launch presale and new housing projects, the central bank said yesterday.
STABILIZING MEASURES
Against this backdrop, the central bank would focus its policy decisions on financial stability, rather than economic growth, in its policy meeting next month, ANZ said.
While the central bank would likely keep interest rates on hold, it might consider mopping up excessive liquidity and launch macro-prudential measures to curb property risks, ANZ said.
The monetary policymaker would refrain from lifting the rediscount rate, currently at 1.125 percent, as a strong policy signal might attract more capital inflows and accelerate currency appreciation, but the ultra-low interest rate would continue to motivate Taiwan’s financial institutions to invest in overseas markets, ANZ said.
Low interest margins have been a concern for Taiwan’s banking sector and other institutional investors, such as life insurance companies, that need sufficient investment returns to cover their long-term liabilities.
With this in mind, the Financial Supervisory Commission might relax investment restrictions to grant financial institutions more flexibility in pursuing better investment yields in offshore markets, ANZ said.
With an approval rating of just two percent, Peruvian President Dina Boluarte might be the world’s most unpopular leader, according to pollsters. Protests greeted her rise to power 29 months ago, and have marked her entire term — joined by assorted scandals, investigations, controversies and a surge in gang violence. The 63-year-old is the target of a dozen probes, including for her alleged failure to declare gifts of luxury jewels and watches, a scandal inevitably dubbed “Rolexgate.” She is also under the microscope for a two-week undeclared absence for nose surgery — which she insists was medical, not cosmetic — and is
CAUTIOUS RECOVERY: While the manufacturing sector returned to growth amid the US-China trade truce, firms remain wary as uncertainty clouds the outlook, the CIER said The local manufacturing sector returned to expansion last month, as the official purchasing managers’ index (PMI) rose 2.1 points to 51.0, driven by a temporary easing in US-China trade tensions, the Chung-Hua Institution for Economic Research (CIER, 中華經濟研究院) said yesterday. The PMI gauges the health of the manufacturing industry, with readings above 50 indicating expansion and those below 50 signaling contraction. “Firms are not as pessimistic as they were in April, but they remain far from optimistic,” CIER president Lien Hsien-ming (連賢明) said at a news conference. The full impact of US tariff decisions is unlikely to become clear until later this month
GROWING CONCERN: Some senior Trump administration officials opposed the UAE expansion over fears that another TSMC project could jeopardize its US investment Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) is evaluating building an advanced production facility in the United Arab Emirates (UAE) and has discussed the possibility with officials in US President Donald Trump’s administration, people familiar with the matter said, in a potentially major bet on the Middle East that would only come to fruition with Washington’s approval. The company has had multiple meetings in the past few months with US Special Envoy to the Middle East Steve Witkoff and officials from MGX, an influential investment vehicle overseen by the UAE president’s brother, the people said. The conversations are a continuation of talks that
Nintendo Co hopes to match the runaway success of the Switch when its leveled-up new console hits shelves on Thursday, with strong early sales expected despite the gadget’s high price. Featuring a bigger screen and more processing power, the Switch 2 is an upgrade to its predecessor, which has sold 152 million units since launching in 2017 — making it the third-best-selling video game console of all time. However, despite buzz among fans and robust demand for pre-orders, headwinds for Nintendo include uncertainty over US trade tariffs and whether enough people are willing to shell out. The Switch 2 “is priced relatively high”
RSS