Fall in yen’s value ham­mers ma­chin­ery ex­porters

The China Post - - LOCAL -

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.

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