The government’s business climate monitor last month flashed “green” for the second straight month, as the nation’s export-focused economy steadily gained traction thanks to improving outbound shipments and industrial production, the National Development Council (NDC) said yesterday.
The total score of the composite index of monitoring indicators' nine constituents gained two points to 29 from the previous month, indicating a continued state of recovery, NDC research director Wu Ming-huei (吳明蕙) said.
“Fast-growing global AI [artificial intelligence] demand is benefiting local firms on the supply chain, catapulting the gauges on exports, industrial output and overtime hours to booming territory,” Wu told a news conference in Taipei.
Photo: CNA
The recovery would grow more evident going forward, as inventory adjustments for technology products would come to an end soon, NDC Minister Kung Ming-hsin (龔明鑫) told a meeting of the legislature’s Economics Committee earlier this week.
The council uses a five-color system to capture the nation’s economic state, with “green” indicating steady growth, “red” suggesting a boom and “blue” reflecting a recession. Dual colors suggest a transition to a stronger or weaker state.
The index of leading indicators, which aims to forecast economic conditions in six months, increased 0.60 percent month-on-month to 101.68 last month, as readings on the labor accession rates, export orders, construction floor space, share prices and business confidence displayed positive movements, the council said.
The improvements came even though imports of semiconductor equipment and money supply remained soft, it said.
Semiconductor equipment is important because it sheds light on the capital spending of major local technology firms, as Taiwan is home to the world’s largest supplier of advanced chips.
The index of coincident indicators, which reflects the current economic situation, increased 0.32 percent to 100.40, aided by advances in industrial production and manufacturing sales, as well as wholesale, retail and restaurant revenue, the council said.
By contrast, the reading on electricity usage and export volume declined due to fewer working days, it said.
In related developments, the consumer confidence index this month inched up 0.29 points to 73.51, as people feel more optimistic about stock investment, economic growth and household income, a survey by National Central University showed yesterday.
The sentiment on stock investment rose 1.56 points, as the TAIEX remained above 20,000 points despite capital outflows.
The rising popularity of domestic and foreign exchange-traded funds lent support to the local bourse, said Dachrahn Wu (吳大任), director of the university’s Research Center for Taiwan Economic Development, which conducted the survey.
Capital flows to exchange-traded funds are not a bad thing, as they are common investment tools around the world and most target diversified blue-chip stocks, making them relatively stable compared with other investment vehicles, Wu 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.
Hong Kong authorities ramped up sales of the local dollar as the greenback’s slide threatened the foreign-exchange peg. The Hong Kong Monetary Authority (HKMA) sold a record HK$60.5 billion (US$7.8 billion) of the city’s currency, according to an alert sent on its Bloomberg page yesterday in Asia, after it tested the upper end of its trading band. That added to the HK$56.1 billion of sales versus the greenback since Friday. The rapid intervention signals efforts from the city’s authorities to limit the local currency’s moves within its HK$7.75 to HK$7.85 per US dollar trading band. Heavy sales of the local dollar by
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
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