Improving the competitive edge of Taiwanese exporters in the global market has offset the adverse impact of a stronger New Taiwan dollar against the US dollar, the central bank said in a report on Thursday.
Many Taiwanese firms, particularly in the semiconductor industry, have invested significantly in advanced processes to meet global demand for emerging technologies, making them more competitive, the central bank said.
Despite the NT dollar’s sharp appreciation last month, strong demand for artificial intelligence (AI) applications and rush orders from foreign buyers to avoid tariffs by US President Donald Trump’s administration pushed up exports by 32.3 percent.
Photo: Ritchie B. Tongo, EPA-EFE
This year, the NT dollar has risen against the US dollar by more than 11 percent. Last month, the local currency soared NT$2.088, or nearly 7 percent, against the greenback.
The central bank said it jumped into the market to shore up the US dollar and prevent the NT dollar from rising further, but denied the US had pressured Taiwan for a stronger local currency while Taipei and Washington were in talks about tariffs.
The appreciation of the NT dollar continued this month, as conflict in the Middle East escalates. Earlier last week, the local currency hit NT$29.460 at one point, the highest in more than three years.
A rising NT dollar cuts both ways: The appreciation is expected to result in foreign exchange losses for exporters, but it would lower costs for companies that need to buy equipment or raw materials overseas, the central bank said.
After a survey on how local enterprises reduce foreign exchange losses, the central bank found that many companies engaged in hedging practices, including “natural hedging.”
A common natural hedging method is to match revenues and expenses or invoices in the local currency, it said.
Many Taiwanese exporters have also adjusted their production and sales models, the central bank said.
In the short term, they raised product prices and cut orders on products with lower gross margins, but they are keen to increase value-added products and diversify their product portfolios in the long run, it said.
The central bank said it would continue its efforts to maintain order in the foreign exchange market and ensure that the NT dollar moves in a dynamic equilibrium.
Central bank Governor Yang Chin-long (楊金龍) on Thursday told reporters that the strength of the NT dollar this year remained acceptable, adding that with Taiwan’s economic growth expected to slow down and US tariff policies likely to become clearer in the second half of the year, the appreciation of the local currency could moderate accordingly.
DIVIDED VIEWS: Although the Fed agreed on holding rates steady, some officials see no rate cuts for this year, while 10 policymakers foresee two or more cuts There are a lot of unknowns about the outlook for the economy and interest rates, but US Federal Reserve Chair Jerome Powell signaled at least one thing seems certain: Higher prices are coming. Fed policymakers voted unanimously to hold interest rates steady at a range of 4.25 percent to 4.50 percent for a fourth straight meeting on Wednesday, as they await clarity on whether tariffs would leave a one-time or more lasting mark on inflation. Powell said it is still unclear how much of the bill would fall on the shoulders of consumers, but he expects to learn more about tariffs
NOT JUSTIFIED: The bank’s governor said there would only be a rate cut if inflation falls below 1.5% and economic conditions deteriorate, which have not been detected The central bank yesterday kept its key interest rates unchanged for a fifth consecutive quarter, aligning with market expectations, while slightly lowering its inflation outlook amid signs of cooling price pressures. The move came after the US Federal Reserve held rates steady overnight, despite pressure from US President Donald Trump to cut borrowing costs. Central bank board members unanimously voted to maintain the discount rate at 2 percent, the secured loan rate at 2.375 percent and the overnight lending rate at 4.25 percent. “We consider the policy decision appropriate, although it suggests tightening leaning after factoring in slackening inflation and stable GDP growth,”
Meta Platforms Inc offered US$100 million bonuses to OpenAI employees in an unsuccessful bid to poach the ChatGPT maker’s talent and strengthen its own generative artificial intelligence (AI) teams, OpenAI CEO Sam Altman has said. Facebook’s parent company — a competitor of OpenAI — also offered “giant” annual salaries exceeding US$100 million to OpenAI staffers, Altman said in an interview on the Uncapped with Jack Altman podcast released on Tuesday. “It is crazy,” Sam Altman told his brother Jack in the interview. “I’m really happy that at least so far none of our best people have decided to take them
PLANS: MSI is also planning to upgrade its service center in the Netherlands Micro-Star International Co (MSI, 微星) yesterday said it plans to set up a server assembly line at its Poland service center this year at the earliest. The computer and peripherals manufacturer expects that the new server assembly line would shorten transportation times in shipments to European countries, a company spokesperson told the Taipei Times by telephone. MSI manufactures motherboards, graphics cards, notebook computers, servers, optical storage devices and communication devices. The company operates plants in Taiwan and China, and runs a global network of service centers. The company is also considering upgrading its service center in the Netherlands into a
RSS