New Tai­wan dol­lar falls to a 5-year low

China’s de­val­u­a­tion, mon­e­tary eas­ing iden­ti­fied as key causes

The China Post - - FRONT PAGE - BY ENRU LIN

The New Tai­wan Dol­lar fell to a five-year low yesterday over the Cen­tral Bank’s ( ) mon­e­tary eas­ing and China’s sur­prise 1.9-per­cent de­val­u­a­tion of the yuan, ac­cord­ing to Taipei Forex Inc. ( ).

On Tues­day, the Peo­ple’s Bank of China slashed the yuan’s fix­ing by nearly 2 per­cent in a bid to boost Chi­nese ex­ports and lift its strug­gling econ­omy.

It marked the yuan’s largest sin­gle- day loss since the mid-1990s and bumped up the green­back while send­ing most cur­ren­cies in Asia slid­ing.

Tai­wan’s cur­rency fell NT$0.320 — or 1 per­cent — to fin­ish at NT$32.080 against the U.S. dol­lar, its weak­est point since Septem­ber 2010 and the great­est de­pre­ci­a­tion since Jan. 28, 2013. Also on Tues­day, Tai­wan’s Cen­tral Bank low­ered the in­ter­est rate on overnight cer­tifi­cates of de­posit from Mon­day’s 0.388 per­cent to 0.386 per­cent, fu­el­ing a surge in bonds.

The move came af­ter dis­ap­point­ing eco­nomic data from the sec­ond quar­ter, in­clud­ing six straight months of ex­ports con­trac­tion and a slim 0.64 per­cent gain in gross do­mes­tic prod­uct (GDP).

Prior to Tues­day’s cut, rates for overnight cer­tifi­cates of de­posit had been kept sta­ble near the pre­vi­ous day’s 0.388 per­cent for about three years.

Busi­ness Lead­ers Tout Boost

to Ex­ports

The Chi­nese Na­tional Fed­er­a­tion of In­dus­tries (CNFI,

) hailed the New Tai­wan Dol­lar’s de­pre­ci­a­tion against the U.S. dol­lar, say­ing it could jump­start Tai­wan ex­ports.

The sharp cur­rency de­val­u­a­tion would make Tai­wan ex­ports ap­pear to be cheaper and more com­pet­i­tive, the as­so­ci­a­tion said.

“The de­pre­ci­a­tion of the New Tai­wan Dol­lar is ab­so­lutely healthy for Tai­wan,” said CNFI Pres­i­dent Lai Cheng-i ( ).

Tsai Lian-sheng ( ), the busi­ness cham­ber’s sec­re­tary gen­eral, cau­tioned that a de­val­ued cur­rency is only a short­term so­lu­tion.

Many fac­tors af­fect im­port and ex­port per­for­mance, Tsai said, stress­ing that Tai­wan’s long-term eco­nomic health de­pends on the state of the global econ­omy and the state of its in­for­ma­tion and com­mu­ni­ca­tions tech­nol­ogy (ICT) sec­tor.

The tech sec­tor cur­rently suf­fers from large in­ven­to­ries and time is needed to ab­sorb those, he said.

It also faces a se­ri­ous threat from China’s emer­gent sup­ply chain, which has de­creased Chi- nese de­pen­dence on Tai­wan’s parts and com­po­nents, Tsai said, stress­ing Tai­wan needs to press harder for en­try to re­gional trade blocs to res­cue ex­ports.

Lim­ited Im­pact on Bank­ing

Cus­tomers

Ex­change an­a­lyst Chen You-zhong ( ) told the Cen­tral News Agency that the yuan de­pre­ci­a­tion’s im­pact on Tai­wanese bank­ing cus­tomers will be lim­ited.

Though it is likely that the yuan will de­pre­ci­ate fur­ther, the typ­i­cal Tai­wanese in­vestor should see a lim­ited neg­a­tive im­pact be­cause Tai­wan and China’s cur­ren­cies tend to see a high de­gree of cor­re­la­tion, Chen said.

Asustek Com­puter Inc ( ), which holds yuan-de­nom­i­nated as­sets, said the firm sees a cause for con­cern only if the yuan’s de­pre­ci­a­tion con­tin­ues.

Tues­day’s re­duc­tion is in the “tol­er­a­ble range” be­tween 1 and 2 per­cent and can be man­aged, a com­pany rep­re­sen­ta­tive said.

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