The central bank yesterday denied acting to unfairly boost Taiwan’s exports, as it attributed the nation’s widening trade surpluses with the US to the fallout from US-China trade tensions.
Central bank Governor Yang Chin-long (楊金龍) made the statement after the bank left its policy rediscount rate unchanged at the record low 1.125 percent saying that Taiwan cannot buck the global trend of monetary easing, given its small and open economy.
“Taiwan’s interest comes first when the central bank carries out its duty,” Yang told a news conference in Taipei, one day after the US Department of the Treasury placed Taiwan on its watch list for currency manipulation.
Photo: Tu Chien-jung, Taipei Times
Taiwan could be labeled a currency manipulator in April if its current account surpluses escalate and the central bank’s intervention exceeds 2 percent of the GDP.
However, Yang said it was difficult, if not impossible, to define currency manipulation, and the US watch list is designed to prevent attempts by trade partners to engage in unfair competition through weakening their currency.
The bank would explain how it moderates the foreign exchange market during a briefing to the legislature in the spring, he said.
“We will make known details of the operation and the amount involved,” Yang said.
The US had exaggerated the sum in its report, based on external projections, while the central bank’s figures would be based on facts, he said.
Taiwan has seen massive fund inflows because of US-China trade tensions and global monetary easing, forcing the central bank to step in to slow their effects, Yang said.
Taiwanese firms have moved manufacturing facilities home from China to circumvent punitive tariffs on Chinese goods and the decoupling of US-China trade ties has allowed them to benefit from order transfers, he said.
That helped explain Taiwan’s strong exports and sharpening current account surpluses, he said.
Ongoing global quantitative easing, three to six times the size during the global financial crisis, has driven excessive funds worldwide — including Taiwan — pushing up the New Taiwan dollar and asset prices noticeably, Yang said.
The central bank has no choice but to intervene in times of massive fund inflows, as on Nov. 30 when MSCI weighting adjustments took place, the governor said.
The central bank would try to understand the US’ reasoning for its actions, but it has to give top priority to Taiwan’s currency and financial market stability, Yang said, adding that the US quantitative policy has eased the central bank’s headache.
The bank raised its forecast for Taiwan’s GDP growth for this year from 1.6 percent to 2.58 percent and expects the expansion to reach 3.68 percent next year, due to better-than-expected exports.
Private consumption would replace exports as the main growth driver next year, it said.
Yang dismissed interest rate hikes as imprudent measures to rein in housing prices, saying that tightening loan-to-value ratios is a better policy tool because it would not affect the economy.
Taiwan’s technology protection rules prohibits Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) from producing 2-nanometer chips abroad, so the company must keep its most cutting-edge technology at home, Minister of Economic Affairs J.W. Kuo (郭智輝) said yesterday. Kuo made the remarks in response to concerns that TSMC might be forced to produce advanced 2-nanometer chips at its fabs in Arizona ahead of schedule after former US president Donald Trump was re-elected as the next US president on Tuesday. “Since Taiwan has related regulations to protect its own technologies, TSMC cannot produce 2-nanometer chips overseas currently,” Kuo said at a meeting of the legislature’s
GEOPOLITICAL ISSUES? The economics ministry said that political factors should not affect supply chains linking global satellite firms and Taiwanese manufacturers Elon Musk’s Space Exploration Technologies Corp (SpaceX) asked Taiwanese suppliers to transfer manufacturing out of Taiwan, leading to some relocating portions of their supply chain, according to sources employed by and close to the equipment makers and corporate documents. A source at a company that is one of the numerous subcontractors that provide components for SpaceX’s Starlink satellite Internet products said that SpaceX asked their manufacturers to produce outside of Taiwan because of geopolitical risks, pushing at least one to move production to Vietnam. A second source who collaborates with Taiwanese satellite component makers in the nation said that suppliers were directly
Top Taiwanese officials yesterday moved to ease concern about the potential fallout of Donald Trump’s return to the White House, making a case that the technology restrictions promised by the former US president against China would outweigh the risks to the island. The prospect of Trump’s victory in this week’s election is a worry for Taipei given the Republican nominee in the past cast doubt over the US commitment to defend it from Beijing. But other policies championed by Trump toward China hold some appeal for Taiwan. National Development Council Minister Paul Liu (劉鏡清) described the proposed technology curbs as potentially having
EXPORT CONTROLS: US lawmakers have grown more concerned that the US Department of Commerce might not be aggressively enforcing its chip restrictions The US on Friday said it imposed a US$500,000 penalty on New York-based GlobalFoundries Inc, the world’s third-largest contract chipmaker, for shipping chips without authorization to an affiliate of blacklisted Chinese chipmaker Semiconductor Manufacturing International Corp (SMIC, 中芯). The US Department of Commerce in a statement said GlobalFoundries sent 74 shipments worth US$17.1 million to SJ Semiconductor Corp (盛合晶微半導體), an affiliate of SMIC, without seeking a license. Both SMIC and SJ Semiconductor were added to the department’s trade restriction Entity List in 2020 over SMIC’s alleged ties to the Chinese military-industrial complex. SMIC has denied wrongdoing. Exports to firms on the list
RSS