Fall in yen’s value hammers machinery exporters
The Japanese yen’s rapid deprecation against the U. S. dollar has hurt Taiwan’s machinery exporters who compete with their Japanese counterparts head-tohead in the global market, according to a survey.
Citing the survey, the Chinese National Federation of Industries (CNFI, ) said that 65 percent of the local machinery exporters polled said that they have felt the pinch resulting from a plunge in the yen.
In the first five months of this year, Taiwan’s machine tool exports fell 6.7 percent from a year earlier amid volatility in the foreign exchange market, statistics compiled by the Ministry of Finance showed.
The firms which fell victim to the yen’s weakness came from a wide range of machinery segments, including computer numerical control machine makers, metal fastener suppliers and auto component makers, the CNFI said.
Since the beginning of this year, the yen has depreciated against the U.S. dollar by 3.01 percent, while the Taiwan dollar actually gained 1.55 percent against the greenback during the same period.
Looking over a longer period, the yen has plunged more than 17 percent against the U.S. dollar since the beginning of 2014 as the Bank of Japan has been adopting U.S. Federal Reservelike quantitative easing to stimulate the economy. During the same period, the Taiwan dollar has only fallen 4.26 percent against the greenback.
The CNFI said that many local machinery exporters have suffered large foreign exchange losses due to the yen’s plunge, while the falling Japanese currency has also led foreign buyers to shift their orders from Taiwan to Japan.
Some of the respondents in the survey said that since small and medium- sized enterprises account for more than 90 percent of the local business sector, they do not have the ability to deal with the problems arising from the currency fluctuations.
The respondents said that they are likely to be able to survive for a year under such unfavorable circumstances, but it is hard to say whether they can stay alive over the next two to three years if the yen continues such a downtrend.
The Taiwan Association Machinery Industry (
) echoed the CNFI’s
of survey, saying that Taiwanese machinery vendors have been asked by their foreign buyers to cut prices to offset the impact resulting from a stronger Taiwan dollar.
Yang Te-hwa ( ) , chairman of machine tool supplier Goodway Machine Corp. (
), said that many second- and third- tier machine tool exporters have been struggling due to the Taiwan dollar’s relatively high value.
Yang said that the government should provide necessary assistance to the local machinery business, suggesting that the local central bank should allow the Taiwan dollar to depreciate to the NT$33 level against the U.S. dollar to remove the current foreign exchange predicament Taiwanese exporters are faced with.