April 15th 2005
Taiwan to depreciate currency
Taiwan’s currency, the NT dollar, declined today, as Taiwan’s central bank threatened to depress its aberrantly strong currency. Taiwan ran a trade deficit last year, and looks likely to do so again this year. The Taiwanese are quick to blame their strong currency as the cause of there trade problems. They are calling for Taiwan’s central bank to depreciate the NT dollar, so that Taiwanese exports can compete with exports from other Southeast Asian nations. The Japanese Yen’s sudden decline has only intensified exporters’ fears of uncompetitiveness. The central bank is likely to respond affirmatively, as a any decline in Taiwanese exports would put a damper on Taiwan’s economy. This intervention will take the form of a sale of NT Dollars, which should sufficiently depress the currency. The Taipei Times reports:
"The central bank will probably be keen to prevent the Taiwan dollar’s appreciation against currencies of Taiwan exporters’ competitors," Dariusz Kowalczyk, investment strategist at CFC Securities Ltd, said in Hong Kong. "The Taiwan dollar will come under pressure."
Read More: Speculation over currency sell-off pushes NT lower
