U.S. economy quickens and sustains demand for exports, according to JPMorgan Chase & Co. The world's biggest economy will probably weather the fallout from losses in the U.S. subprime mortgage market because the Federal Reserve will cut interest rates starting this month, said Claudio Piron at JPMorgan, the third-largest U.S. bank by assets. Taiwan's central bank, meanwhile, will lift rates, fueling demand for the currency, he said.
"Fed rate cuts will save the day and prevent the credit problems from spreading to contagion and hurting global growth," said Piron, the bank's Singapore-based head of Asian currency research. "Taiwan is a very open economy and dependent on the global growth cycle."
The Taiwanese currency has dropped 1.2 percent since July 10 to 33.032 per U.S. dollar on concern that a U.S. housing recession would spread and slow Asian economies. JPMorgan forecast the Taiwan dollar will appreciate to 32.2 per U.S. dollar in the next two months, the strongest since July 2006.
