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June 24, 2017

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Premier Chen comes to Perng's defense on exchange rate

Premier Sean Chen yesterday gave its resounding support for the central bank's exchange rate policy, which he said should be based on a range of factors, not just on the interests of one particular industry.

He made the remarks in response to Morris Chang, chairman and CEO of Taiwan Semiconductor Manufacturing Co., who again criticized Perng Fai-nan, governor of the Central Bank of the Republic of China, for widening the exchange rate difference between the New Taiwan dollar and the won, the currency of South Korea, Taiwan's major competitor.

During a forum Thursday between Chang and a Nobel Prize winner, the tech guru chastised Perng and the central bank for their exchange rate policy. Chang has been criticizing the central bank chief almost on a yearly basis since 2009.

With graphs and charts in his hands, Chang said that since Dec. 31, 2007, the New Taiwan dollar has risen 9.9 percent, while the Korean won has dropped 17.9 percent. This, according to Chang, has added 30 percent to the cost of exporting Taiwan products compared to South Korean exports.

"If you have a CEO at a private company who makes cost 30 percent higher for five years in a row, he'd be fired already," Chang said.

Chang's concerns are shared by many of Taiwan's high-tech firms, many of which have reported third quarter exchange rate losses in the midst of a sharp surge of the New Taiwan dollar. The currency yesterday closed at NT$29.3, weakening NT$0.02, on trade volume of US$565 million.

Among those firms are Acer, Largan and Orise Tech. Yet yesterday, Premier Chen came to Perng's defense.

"The formulation of exchange rate policy is based a consideration of a variety of factors. For example, a currency depreciation may lead to inflation," Chen said.

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