The continued appreciation of the New Taiwan dollar against the US dollar this year has triggered an outcry from export-oriented businesses
Compared with 2018 and last year, the NT dollar’s appreciation has been more marked than that of the South Korean won, causing many in the traditional local industries to underperform their trading rivals, an issue one central bank board member addressed during the bank’s quarterly policymaking meeting on Sept. 17, according to the release of the meeting minutes on Oct. 29.
On Oct. 6, the NT dollar rose above NT$29 against the greenback for the first time in more than nine years on the back of foreign fund inflows. On Friday, it briefly surpassed NT$28.5 and hit an intraday high of NT$28.492 before paring its gains to close at NT$28.876 — due to the central bank’s alleged interventions.
However, the strength of NT dollar in the early Friday session caught many people off guard.
The reason this exchange rate level is important is that it was the highest against the US currency during the terms of former central bank governor Perng Fai-nan (彭淮南), who retired in February 2018 after 20 years.
The general market view during his term was that the NT$28.5 mark was the bank’s line of defense for the NT dollar exchange rate. Is that still the line of defense under central bank Governor Yang Chin-long (楊金龍)?
Yang late last month said that it might become the new normal for the currency to trade above NT$29 against its US peer, and the rumored actions by the bank on Friday to pull the NT dollar back as soon as it hit that high could throw light on the issue. It made it clear that the bank still attaches great attention to it.
With respect to the NT dollar’s strength this year, the bank on Friday said the nation’s exports grew by 2.4 percent year-on-year during the first nine months of the year, while most major Asian economies recorded annual export declines owing to soft demand amid the COVID-19 pandemic and US-China trade disputes.
Moreover, the bank said the 4.26 percent appreciation of the NT dollar against the US currency this year has been moderate when compared with a more than 5 percent rise in the Chinese, Japanese, Philippine and eurozone currencies.
These comments indicate that the bank is relatively comfortable with the NT dollar’s appreciation, and that because the bank does not see the currency as overvalued, it is more likely that it would be open to allowing the currency to appreciate — at a measured pace.
Wu Meng-tao (吳孟道), an economist at the Taiwan Institute of Economic Research, on Saturday told the state-run Central News Agency that a stronger NT dollar is expected to continue once uncertainty created by the US presidential election is removed.
In addition, as the spillover effect of the US monetary easing policy has a global impact, coupled with the impact of pandemic-induced monetary easing and ample market liquidity worldwide, the NT dollar, like some other non-US dollar currencies, would continue to face upside pressures, Wu said.
The appreciation of the NT dollar will impact the nation’s exporters, and firms can adopt foreign exchange management to diversify or hedge their risks.
In the face of restocking demand from Chinese firms and orders for products of emerging technologies and remote work tools from other countries, combined with gradual reopening in many economies, Taiwanese companies must upgrade themselves, develop new products and strengthen competitiveness to stay afloat.
They cannot just rely on the depreciation of the NT dollar exchange rate: The world has changed as it enters a post-pandemic era.
On May 7, 1971, Henry Kissinger planned his first, ultra-secret mission to China and pondered whether it would be better to meet his Chinese interlocutors “in Pakistan where the Pakistanis would tape the meeting — or in China where the Chinese would do the taping.” After a flicker of thought, he decided to have the Chinese do all the tape recording, translating and transcribing. Fortuitously, historians have several thousand pages of verbatim texts of Dr. Kissinger’s negotiations with his Chinese counterparts. Paradoxically, behind the scenes, Chinese stenographers prepared verbatim English language typescripts faster than they could translate and type them
More than 30 years ago when I immigrated to the US, applied for citizenship and took the 100-question civics test, the one part of the naturalization process that left the deepest impression on me was one question on the N-400 form, which asked: “Have you ever been a member of, involved in or in any way associated with any communist or totalitarian party anywhere in the world?” Answering “yes” could lead to the rejection of your application. Some people might try their luck and lie, but if exposed, the consequences could be much worse — a person could be fined,
Xiaomi Corp founder Lei Jun (雷軍) on May 22 made a high-profile announcement, giving online viewers a sneak peek at the company’s first 3-nanometer mobile processor — the Xring O1 chip — and saying it is a breakthrough in China’s chip design history. Although Xiaomi might be capable of designing chips, it lacks the ability to manufacture them. No matter how beautifully planned the blueprints are, if they cannot be mass-produced, they are nothing more than drawings on paper. The truth is that China’s chipmaking efforts are still heavily reliant on the free world — particularly on Taiwan Semiconductor Manufacturing
Last week, Nvidia chief executive officer Jensen Huang (黃仁勳) unveiled the location of Nvidia’s new Taipei headquarters and announced plans to build the world’s first large-scale artificial intelligence (AI) supercomputer in Taiwan. In Taipei, Huang’s announcement was welcomed as a milestone for Taiwan’s tech industry. However, beneath the excitement lies a significant question: Can Taiwan’s electricity infrastructure, especially its renewable energy supply, keep up with growing demand from AI chipmaking? Despite its leadership in digital hardware, Taiwan lags behind in renewable energy adoption. Moreover, the electricity grid is already experiencing supply shortages. As Taiwan’s role in AI manufacturing expands, it is critical that
RSS