The New Taiwan dollar last quarter weakened 3.51 percent against its US counterpart as foreign funds continued to pull out of the local market after the US Federal Reserve announced it would keep interest rates higher and for longer to combat inflation, the central bank said in a report released yesterday.
The report came a day before central bank Governor Yang Chin-long (楊金龍) is to brief the legislature’s Finance Committee on its operations and budget preparation for next year.
As of Thursday last week, the local currency had declined 4.83 percent so far this year, but stayed relatively stable compared with the yen, yuan and won, the report said.
Photo: CNA
The central bank spent a net US$880 million in the first half of this year to support the NT dollar, it added.
The NT dollar fell NT$0.091 to close at NT$32.328 per US dollar in Taipei trading yesterday, its weakest since July 7, 2016, central bank data showed.
“Currency market stability is important for Taiwan in light of its heavy reliance on foreign trade,” the report said.
The exchange rate of the NT dollar has long been less volatile than major currencies, favorable for local firms to quote prices and helpful in maintaining economic growth, it said.
Ongoing global fund movements have much to do with market expectations of a soft landing for the US economy and the Fed’s hawkish rhetoric about holding interest rates at high levels for longer to facilitate returning consumer prices to its 2 percent target.
Tight monetary policy accounted for a strong US dollar, euro and British pound, as well as fund outflows from Asian markets where inflation is not problematic and central banks assign more importance to economic growth, it said.
The central bank said it opted to keep interest rates unchanged in June and last month on the belief that Taiwan’s consumer price index (CPI) would slow in the second half of this year and return to the 2 percent range next year.
The CPI and core CPI — which excludes volatile items such as fruit, vegetable and energy prices — might rise to 2.22 percent and 2.44 percent respectively this year, before cooling to 1.83 percent and 1.73 percent next year, it said.
Net interventions for the past 12 months totaled US$5.63 billion, or about 0.76 percent of Taiwan’s GDP, the central bank said.
By contrast, Taiwan’s economic performance has been disappointing and would lead to a negative output gap this year and next year, it said.
The nation accumulated US$565.5 billion of foreign exchange reserves in the first eight months, up US$569.8 billion from the end of last year and sufficient to meet exchange needs, it said.
The central bank said it expects to contribute NT$200 billion to the national treasury in the 2024 fiscal year, marking an increase of NT$19.3 billion from the previous fiscal year.
Semiconductor shares in China surged yesterday after Reuters reported the US had ordered chipmaking giant Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) to halt shipments of advanced chips to Chinese customers, which investors believe could accelerate Beijing’s self-reliance efforts. TSMC yesterday started to suspend shipments of certain sophisticated chips to some Chinese clients after receiving a letter from the US Department of Commerce imposing export restrictions on those products, Reuters reported on Sunday, citing an unnamed source. The US imposed export restrictions on TSMC’s 7-nanometer or more advanced designs, Reuters reported. Investors figured that would encourage authorities to support China’s industry and bought shares
TECH WAR CONTINUES: The suspension of TSMC AI chips and GPUs would be a heavy blow to China’s chip designers and would affect its competitive edge Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), the world’s biggest contract chipmaker, is reportedly to halt supply of artificial intelligence (AI) chips and graphics processing units (GPUs) made on 7-nanometer or more advanced process technologies from next week in order to comply with US Department of Commerce rules. TSMC has sent e-mails to its Chinese AI customers, informing them about the suspension starting on Monday, Chinese online news outlet Ijiwei.com (愛集微) reported yesterday. The US Department of Commerce has not formally unveiled further semiconductor measures against China yet. “TSMC does not comment on market rumors. TSMC is a law-abiding company and we are
FLEXIBLE: Taiwan can develop its own ground station equipment, and has highly competitive manufacturers and suppliers with diversified production, the MOEA said The Ministry of Economic Affairs (MOEA) yesterday disputed reports that suppliers to US-based Space Exploration Technologies Corp (SpaceX) had been asked to move production out of Taiwan. Reuters had reported on Tuesday last week that Elon Musk-owned SpaceX had asked their manufacturers to produce outside of Taiwan given geopolitical risks and that at least one Taiwanese supplier had been pushed to relocate production to Vietnam. SpaceX’s requests place a renewed focus on the contentious relationship Musk has had with Taiwan, especially after he said last year that Taiwan is an “integral part” of China, sparking sharp criticism from Taiwanese authorities. The ministry said
US President Joe Biden’s administration is racing to complete CHIPS and Science Act agreements with companies such as Intel Corp and Samsung Electronics Co, aiming to shore up one of its signature initiatives before US president-elect Donald Trump enters the White House. The US Department of Commerce has allocated more than 90 percent of the US$39 billion in grants under the act, a landmark law enacted in 2022 designed to rebuild the domestic chip industry. However, the agency has only announced one binding agreement so far. The next two months would prove critical for more than 20 companies still in the process
RSS