Weak yen puts pressure on TWD: experts
The China Post news staffTAIPEI, Taiwan -- The downward trend of the Japanese yen will heap pressure on the New Taiwan dollar and may force the central bank to curb the local unit's appreciation, experts said yesterday.
January 22, 2013, 4:16 pm TWN
They made the remarks as the New Taiwan dollar yesterday weakened NT$0.01 to NT$29.07 against the greenback, on trade volume of US$438 million.
Last Friday, the yen had weakened past 90 against the U.S. dollar at one point, raising speculation the Japanese currency may devalue to the 110 level.
According to experts, the yen's decline may indeed result in a devaluation race among other Asian currencies, as countries in the region seek to make their exports more competitive internationally.
The South Korean government, for example, has shown signs that it will keep the won at a low, experts said, adding a devaluation of the won will force Taiwan's central bank to step up efforts to curb the New Taiwan dollar's rising trend, as Korea is one of the island's biggest competitors.
Citing historic data, experts said that the last time the yen devalued on a big scale was in 2005, when the currency weakened from 101 to 120 against the greenback. That year, the New Taiwan dollar rose in the beginning of the year and then went on a downward trend.
According to experts, the yen weakening to 110 must be supported by an economic turnaround in the United States. Once that happens, coupled with a suspension of loosened monetary policy in the U.S., the New Taiwan dollar may hover between NT$28.5 and NT$31.5, experts said.