The central bank would intervene in the market whenever necessary to help stabilize the New Taiwan dollar, central bank Governor Yang Chin-long (楊金龍) said yesterday, adding that it is concerned Taiwan might be placed on the US watchlist for currency manipulation.
The Control Yuan recently sent letter inquiring about the central bank’s market regulation efforts, Yang told a meeting of the legislature’s Finance Committee on the NT dollar’s appreciation and property price hikes.
“It is the central bank’s top responsibility to stabilize foreign exchanges,” he said.
Photo: Peter Lo, Taipei Times
The central bank has often stepped in toward the end of trading sessions to moderate the NT dollar’s appreciation against the US dollar.
The NT dollar had as of yesterday picked up 3.32 percent against the greenback this year and has on several occasions temporarily surpassed the NT$28.5 defense threshold allegedly set by Yang’s predecessor, Perng Fai-nan (彭淮南).
The central bank has to take action when noticing currency speculation and disorderly fund movements, Yang said.
The governor declined to comment on reports that the NT dollar might next year rise to NT$27.5, but said that global investment banks have mixed views about the US dollar’s outlook.
Taiwan is likely to be added to the US watch list after meeting two criteria: having a trade surplus with the US of at least US$20 billion and a current account surplus of more than 2 percent of GDP, Yang said.
The US normally updates its currency list twice a year, in April and October, but has not released a list so far this year, Yang said, adding that the central bank would try to communicate with the US on the matter.
Yang warned against loose real-estate lending, saying that the government would continue its coordinated efforts to thwart property speculation without affecting real-estate demand.
The endeavor is in the initial stage, but further measures might be implemented if the intended effect is not achieved, Yang said.
In certain sectors of the commercial real-estate market, the price development has been reasonable, as companies are returning production capacity home from China, he said.
Property prices in sectors without such support should be steadier, Yang said, adding that investment accounts for about 14 percent of real-estate financing.
In a best case scenario, the government would achieve its goal of curbing property speculation without putting pressure on local banks, Yang said.
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 Financial Supervisory Commission (FSC) yesterday met with some of the nation’s largest insurance companies as a skyrocketing New Taiwan dollar piles pressure on their hundreds of billions of dollars in US bond investments. The commission has asked some life insurance firms, among the biggest Asian holders of US debt, to discuss how the rapidly strengthening NT dollar has impacted their operations, people familiar with the matter said. The meeting took place as the NT dollar jumped as much as 5 percent yesterday, its biggest intraday gain in more than three decades. The local currency surged as exporters rushed to
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
RSS