The latest economic data released last week suggested that the nation’s external trade remains in good shape and domestic inflation is under control. However, the local stock market opened the first week of the year with a fall of 2.12 percent and the New Taiwan dollar passed the key NT$30 per US dollar level at the close of trading on Friday, for the first time in 13 years.
The question is why this positive economic data have not translated into bullish market sentiment. Is foreign capital being pulled out of local equities? Has the central bank become more accepting of a stronger NT dollar?
There are no simple answers to these questions. Instead, the current situation reflects the fact that, regardless of how positive the economic data, the business climate and market sentiment can change with unexpected speed.
On Friday, the Ministry of Finance reported that exports last month grew at a pace of 19.1 percent year-on-year to US$23.8 billion, the 14th straight monthly increase, while imports grew 21.4 percent to US$22.2 billion. For the whole of last year, exports expanded 34.8 percent to a record US$274.64 billion and imports at an even more rapid pace of 44.2 percent to US$251.4 billion, also a record.
Last year’s external trade figures were impressive in terms of both exports and imports. However, that recovery is a thing of the past. The recent heavy snowstorms in the US and Europe as well as rising wages in China and efforts to damp down the overheating Chinese economy have now emerged as new worries for Taiwanese exporters.
Local PC brand Acer Inc confirmed last week that it would probably miss its fourth-quarter sales target because of the bad weather in Europe, but it is unlikely to be the only company falling short of its targets this year.
As local shares rose 9.58 percent last year, it would not be unreasonable to expect a short-term market correction, but nothing has changed the central bank’s position on “hot money” inflows and the appreciation of the NT dollar, as long as the extra-loose monetary policy adopted in Western countries remains in place.
As such, the central bank’s decision on Friday — to allow the NT dollar to close the session at NT$29.8 against the US dollar, a level not seen since Oct. 20, 1997 — was unusual. Indeed, although the greenback has recently gained in strength against most Asian currencies and the euro, the NT dollar was one of only two Asian currencies to trade higher against the US dollar on Friday. The other was the New Zealand dollar.
Some argue that the central bank is willing to tolerate a stronger NT dollar because Taiwanese exporters have learned how to hedge foreign exchange losses. Others suggest this is essentially an effort by the central bank to pre-empt inflation driven by rising import material prices.
Perhaps the central bank has come to realize that its alleged interventions in late trading sessions over the past few months has so far failed to ease market expectations of further currency appreciation.
Given that the closing prices of the NT dollar over the past few months has become a reference mark rather than a real price, it is reasonable to assume that the central bank is looking for different ways to deal with the currency issue.
Naturally, the bank is not going to announce what that will be, but it has now sent a clear message to the market that it would accept an NT dollar rise to above the NT$30 level. People must now learn to deal with a stronger NT dollar and exporters especiallyneed to be aware of the possible consequences.
On Sunday, 13 new urgent care centers (UCC) officially began operations across the six special municipalities. The purpose of the centers — which are open from 8am to midnight on Sundays and national holidays — is to reduce congestion in hospital emergency rooms, especially during the nine-day Lunar New Year holiday next year. It remains to be seen how effective these centers would be. For one, it is difficult for people to judge for themselves whether their condition warrants visiting a major hospital or a UCC — long-term public education and health promotions are necessary. Second, many emergency departments acknowledge
US President Donald Trump’s seemingly throwaway “Taiwan is Taiwan” statement has been appearing in headlines all over the media. Although it appears to have been made in passing, the comment nevertheless reveals something about Trump’s views and his understanding of Taiwan’s situation. In line with the Taiwan Relations Act, the US and Taiwan enjoy unofficial, but close economic, cultural and national defense ties. They lack official diplomatic relations, but maintain a partnership based on shared democratic values and strategic alignment. Excluding China, Taiwan maintains a level of diplomatic relations, official or otherwise, with many nations worldwide. It can be said that
Chinese Nationalist Party (KMT) Chairwoman Cheng Li-wun (鄭麗文) made the astonishing assertion during an interview with Germany’s Deutsche Welle, published on Friday last week, that Russian President Vladimir Putin is not a dictator. She also essentially absolved Putin of blame for initiating the war in Ukraine. Commentators have since listed the reasons that Cheng’s assertion was not only absurd, but bordered on dangerous. Her claim is certainly absurd to the extent that there is no need to discuss the substance of it: It would be far more useful to assess what drove her to make the point and stick so
The central bank has launched a redesign of the New Taiwan dollar banknotes, prompting questions from Chinese Nationalist Party (KMT) legislators — “Are we not promoting digital payments? Why spend NT$5 billion on a redesign?” Many assume that cash will disappear in the digital age, but they forget that it represents the ultimate trust in the system. Banknotes do not become obsolete, they do not crash, they cannot be frozen and they leave no record of transactions. They remain the cleanest means of exchange in a free society. In a fully digitized world, every purchase, donation and action leaves behind data.
RSS