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.
ENERGY ISSUES: The TSIA urged the government to increase natural gas and helium reserves to reduce the impact of the Middle East war on semiconductor supply stability Chip testing and packaging service provider ASE Technology Holding Co (日月光投控) yesterday said it planned to invest more than NT$100 billion (US$3.15 billion) in building a new advanced chip testing facility in Kaohsiung to keep up with customer demand driven by the artificial intelligence (AI) boom. That would be included in the company’s capital expenditure budget next year, ASE said. There is also room to raise this year’s capital spending budget from a record-high US$7 billion estimated three months ago, it added. ASE would have six factories under construction this year, another record-breaking number, ASE chief operating officer Tien Wu
The EU and US are nearing an agreement to coordinate on producing and securing critical minerals, part of a push to break reliance on Chinese supplies. The potential deal would create incentives, such as minimum prices, that could advantage non-Chinese suppliers, according to a draft of an “action plan” seen by Bloomberg. The EU and US would also cooperate on standards, investments and joint projects, as well as coordinate on any supply disruptions by countries like China. The two sides are additionally seeking other “like-minded partners” to join a multicountry accord to help create these new critical mineral supply chains, which feed into
For weeks now, the global tech industry has been waiting for a major artificial intelligence (AI) launch from DeepSeek (深度求索), seen as a benchmark for China’s progress in the fast-moving field. More than a year has passed since the start-up put Chinese AI on the map in early last year with a low-cost chatbot that performed at a similar level to US rivals. However, despite reports and rumors about its imminent release, DeepSeek’s next-generation “V4” model is nowhere in sight. Speculation is also swirling over the geopolitical implications of which computer chips were chosen to train and power the new
TECH WINNERS: Taiwan and South Korea reported robust trade, which suggests that they have critical advantages in the rapidly expanding AI supply chain, an official said Exports last month surged to a new high, as booming demand tied to artificial intelligence (AI) infrastructure fueled shipments of advanced technology components, underscoring the nation’s pivotal role in the global semiconductor supply chain. Outbound shipments climbed to US$80.18 billion, the highest ever for a single month, rising 61.8 percent from a year earlier and marking the 29th consecutive month of growth, the Ministry of Finance said yesterday. “The surge was driven primarily by global investment in AI infrastructure,” Department of Statistics Director-General Beatrice Tsai (蔡美娜) said. The mass production of next-generation AI computing systems has accelerated procurement across the semiconductor supply
RSS