A trade group yesterday called on the government to stabilize the local currency, saying a strong New Taiwan dollar against its US counterpart would erode corporate profitability and undermine the nation’s exports.
Taipei-based Chinese National Association of Industry and Commerce (CNAIC, 工商協進會) chairman Lin Por-fong (林伯豐) pleaded with policymakers to give serious thought to the health of local enterprises while they seek to avoid currency manipulation charges from the US.
“A strong NT dollar could deal a heavy blow to local exports if it appreciates above the NT$27 level in Taipei against the greenback,” Lin told reporters on the sidelines of a public function.
Photo: CNA
The local currency yesterday closed virtually flat at a 23-year high of NT$28.45 against the US dollar, smashing the NT$28.5 defense reportedly set by former central bank governor Perng Fai-nan (彭淮南).
Currency analysts have forecast a continued upturn as the US Federal Reserve’s money-printing policy would keep the US dollar soft, while Taiwan’s economic recovery and vibrant exports attract capital inflows.
The trend bodes ill for local exporters, many of which have incurred foreign-exchange losses and might lose orders to regional rivals, aided by favorable tariff rates following the signing of the Regional Comprehensive Economic Partnership (RCEP) on Nov. 15, Lin said.
The trade bloc consists of 15 Asia-Pacific members — including ASEAN nations, Australia, China and New Zealand — that account for nearly 30 percent of the global population and GDP.
This year is already characterized by turbulence due to the COVID-19 pandemic, US-China trade tensions, the US presidential elections, financial market volatility and the RCEP exclusion, Lin said, adding that a strengthening NT dollar is posing an additional challenge to corporate operations.
While currencies in Malaysia, Thailand and other countries are also picking up, their pace is not as steep as that of the NT dollar, Lin said.
As of yesterday, the NT dollar had already gained 5.5 percent this year, central bank data showed.
Lin said that he understood the central bank’s effort to avoid being accused of currency manipulation, but the survival of local exporters is at stake.
Suppliers of textiles, machinery and electronics might have no choice but to move manufacturing elsewhere with a more favorable operating environment, he said.
The government should also try to pursue free-trade agreements with other countries and help returning companies purchase land for industrial use at reasonable rates, CNAIC said.
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