The rapid appreciation of the New Taiwan dollar poses greater harm to local machinery manufacturers than the US tariffs, the Taiwan Association of Machinery Industry (台灣機械公會) said yesterday, reiterating its call for the government to help stabilize the exchange rate when appropriate.
A stronger NT dollar makes Taiwanese products more expensive for foreign buyers, which could dampen orders and squeeze profit margins for export-oriented machinery makers, the association said in a report released alongside the industry’s trade data for last month.
Small and medium-sized manufacturers are particularly vulnerable, as they might lack the financial capacity to hedge effectively against currency fluctuations, it said.
Photo: RITCHIE B. TONGO, EPA-EFE
Taiwan’s machinery exports — primarily inspection and testing equipment, electronic equipment and machine tools — rose for the fourth consecutive month last month, climbing 8.9 percent year-on-year to US$2.78 billion, the report said.
However, in NT dollar terms, machinery exports rose only 4 percent from a year earlier to NT$86.01 billion (US$2.87 billion), the report added.
The nearly 5 percentage-point gap between growth measured in US dollars and NT dollars indicates a decrease in profits for firms, it said.
From April 1 to Monday, the NT dollar had surged 9.8 percent against the US dollar, significantly more than the yen’s 3.4 percent gain and the yuan’s 1.1 percent rise over the same period, the association said, adding that the sharp appreciation has weighed on Taiwanese manufacturers’ order visibility and profit outlook.
Cumulative machinery exports in the first five months of the year reached US$12.19 billion, up 5.7 percent from a year earlier and accelerating from the 4.7 percent growth in the first four months, as the sector continued its gradual recovery, the association said.
By product category, overseas shipments of electronic equipment rose 14.7 percent to US$2.14 billion, while exports of inspection and testing equipment edged up 1.1 percent to US$1.97 billion. In contrast, machine tool exports declined 7.1 percent to US$819 million, it said.
During the first five months of the year, the US remained the top destination for Taiwanese machinery products, purchasing US$3.2 billion of goods, or 26.2 percent of the nation’s total exports, followed by China with US$2.82 billion, accounting for 23.1 percent, while Japan ranked third at US$961 million, or 7.9 percent, it added.
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