The central bank yesterday lowered key interest rates for the second time this month following a bigger move by its US counterpart overnight, citing concern over an increasingly gloomy economic picture at home.
The rate cut, the third of its kind since Sept. 26 and declared before the start of equities trade, effectively boosted investors’ confidence as the TAIEX and New Taiwan dollar both staged a strong rebound.
In yet another unscheduled news conference early yesterday morning, central bank Governor Perng Fai-nan (彭淮南) said the bank’s board decided to reduce the discount rate, the rate on accommodations with collateral and the rate on accommodations without collateral by 25 basis points each to 3 percent, 3.375 percent and 5.25 percent respectively.
The new rates would take effect immediately, the top monetary regulator said, adding that dwindling economic activity prompted the central bank to make the adjustments.
“The rate cut is expected to help spur economic growth,” Perng said. “The downside risks loom larger as evidenced by falling exports as well as industrial output and rising jobless rates.”
The unemployment rate hit a four-year high of 4.27 percent last month, up 0.13 percentage points from August, defying a seasonal drop in unemployment normally seen at the end of summer. Exports, in the meantime, declined by 1.6 percent for the first time in six-and-half years as the US financial crisis threatened to plunge the world economy into recession.
Perng said that the rate cut would not fuel inflationary pressures as consumer price growth had slowed for two straight months and was expected to decrease further for the rest of the year.
On the back of the rate cut news, the stock market shot up 277.12 points, or 6.28 percent, to close at 4,683.14 yesterday, on turnover of NT$67.7 billion (US$2.06 billion).
Foreign funds, which have been steadily pulling out of Asian markets in the wake of the credit crunch, bought a net NT$735 million in local shares, the Taiwan Stock Exchange’s data showed.
Likewise, the local currency picked up 1.5 percent, or NT$0.496, to close at NT$32.799 against the greenback yesterday on turnover of NT$3.892 billion, the third largest in foreign exchange history.
Trading was valued at US$3.32 billion on the Taipei Forex Inc and US$563 million on the smaller Cosmos Foreign Exchange, data from the two companies showed.
A trader at the Union Bank of Taiwan (聯邦銀行) attributed the rise in the NT dollar to technically weakening demand for the US dollar across the board, and said the trend would not last long.
MULTIFACETED: A task force has analyzed possible scenarios and created responses to assist domestic industries in dealing with US tariffs, the economics minister said The Executive Yuan is tomorrow to announce countermeasures to US President Donald Trump’s planned reciprocal tariffs, although the details of the plan would not be made public until Monday next week, Minister of Economic Affairs J.W. Kuo (郭智輝) said yesterday. The Cabinet established an economic and trade task force in November last year to deal with US trade and tariff related issues, Kuo told reporters outside the legislature in Taipei. The task force has been analyzing and evaluating all kinds of scenarios to identify suitable responses and determine how best to assist domestic industries in managing the effects of Trump’s tariffs, he
TIGHT-LIPPED: UMC said it had no merger plans at the moment, after Nikkei Asia reported that the firm and GlobalFoundries were considering restarting merger talks United Microelectronics Corp (UMC, 聯電), the world’s No. 4 contract chipmaker, yesterday launched a new US$5 billion 12-inch chip factory in Singapore as part of its latest effort to diversify its manufacturing footprint amid growing geopolitical risks. The new factory, adjacent to UMC’s existing Singapore fab in the Pasir Res Wafer Fab Park, is scheduled to enter volume production next year, utilizing mature 22-nanometer and 28-nanometer process technologies, UMC said in a statement. The company plans to invest US$5 billion during the first phase of the new fab, which would have an installed capacity of 30,000 12-inch wafers per month, it said. The
Taiwan’s official purchasing managers’ index (PMI) last month rose 0.2 percentage points to 54.2, in a second consecutive month of expansion, thanks to front-loading demand intended to avoid potential US tariff hikes, the Chung-Hua Institution for Economic Research (CIER, 中華經濟研究院) said yesterday. While short-term demand appeared robust, uncertainties rose due to US President Donald Trump’s unpredictable trade policy, CIER president Lien Hsien-ming (連賢明) told a news conference in Taipei. Taiwan’s economy this year would be characterized by high-level fluctuations and the volatility would be wilder than most expect, Lien said Demand for electronics, particularly semiconductors, continues to benefit from US technology giants’ effort
‘SWASTICAR’: Tesla CEO Elon Musk’s close association with Donald Trump has prompted opponents to brand him a ‘Nazi’ and resulted in a dramatic drop in sales Demonstrators descended on Tesla Inc dealerships across the US, and in Europe and Canada on Saturday to protest company chief Elon Musk, who has amassed extraordinary power as a top adviser to US President Donald Trump. Waving signs with messages such as “Musk is stealing our money” and “Reclaim our country,” the protests largely took place peacefully following fiery episodes of vandalism on Tesla vehicles, dealerships and other facilities in recent weeks that US officials have denounced as terrorism. Hundreds rallied on Saturday outside the Tesla dealership in Manhattan. Some blasted Musk, the world’s richest man, while others demanded the shuttering of his
RSS