The government’s business climate monitor last month remained “blue” for the eighth straight month as major economic barometers displayed negative cyclical movements, in line with a recessionary state, the National Development Council (NDC) said yesterday.
The total value of the nine monitoring indicators gained 1 point to 13, thanks to rallies in the local bourse as local tech stocks benefited from their participation in the supply of artificial intelligence (AI) devices, the council said.
“The stock closing prices flashed the first ‘green’ light in 15 months, suggesting the business landscape would grow brighter,” the council said.
Photo: CNA
The council uses a five-color system to portray the nation’s economic health, with “green” signifying steady growth, “red” suggesting a boom and “blue” reflecting a recession. Dual colors suggest transition to a stronger or weaker state. Stock prices are widely believed to lead real business performance by several months.
The remaining eight constituent measures stayed unchanged from one month earlier, the council said, adding that the business climate monitor could emerge from “blue” territory later this year.
The index of leading indicators, which seeks to project the economic situation in the next six months, shed another 0.63 percent from one month earlier to 98.56, the council said.
The readings on labor accession and business confidence showed positive cyclical movements, in addition to stock prices, it said.
The partial uptick came even though declines in imports of semiconductor equipment, export orders and building floor areas widened, the council said.
The index of coincident indicators, which reflects the current economic situation, increased 0.04 percent to 93.61, an encouraging sign, it said.
The values on non-farm payroll and electricity usage increased, but industrial output, imports of electrical and machinery equipment, exports and manufacturing sales continued to decline, it said.
The council stood by the view that the nation’s GDP growth this year would exceed 2 percent as the Directorate-General of Budget, Accounting and Statistics projected in May. The statistics agency is to release data on the second quarter tomorrow.
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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