Yen's fall may help, harm exports: TIER
By Linger Liu, The China PostTAIPEI, Taiwan -- The New Taiwan dollar reached a four-month high yesterday at NT$29.03, according to the Taiwan Stock Exchange index (TAIEX).
January 12, 2013, 12:00 am TWN
Meanwhile, experts said exports may grow on the back of the Japanese yen's recent depreciation.
The U.S. dollar fell against the Taiwan dollar Friday, shedding NT$0.049 to close at NT$29.039 after the greenback recouped most of its earlier losses on the back of the local central bank's buying, according to CNA.
Taiwan's Exports Face Competition
The yen's decline may be both a positive and negative for Taiwan's high tech industry, the Taiwan Institute of Economic Research (TIER) said yesterday.
It said exports from Taiwan's semiconductor and photoelectric industries may grow due to the deprecation of the yen. The boost will be driven from the decreasing prices of Japanese raw materials and components, said TIER.
Given an increase in the cost of doing business with Taiwanese industry, the yen's devaluation may at the same time decrease outsource orders from Japan, according to TIER.
Given that Japanese global exports will likely increase, the drop in the yen's value will increase the competition that Taiwanese export and high-tech industries face in the global market.
Japan Adjusting the Yen
Pictet Funds, a global investment and research group, predicted that the Japanese government will reconstruct their monetary policy. The government may pressure the Japanese central bank to set the targeted inflation rate at 2 percent.
Pictet Funds said the yen has been losing value since June 2012. The yen has been steadily losing value to the South Korean won, dropping 20 percent since June 2012, Pictet Funds said.
The yen's drop vis-a-vis the won may increase Japan's export ability versus Korea, notably in the auto and high tech industries.
Between Dec. 16 of last year and Jan. 9 of this year, the Tokyo Stock Exchange (TSE) has grown 8.6 percent and is expected to loosen its monetary policy, the Pictet Funds said.
Pictet Funds forecast that the new Japanese cabinet will promote economic growth policies while depreciating the value of the yen in order to boost export growth.
Japan's cabinet yesterday announced plans to invest US$226.5 billion targeting economic recovery. The government intends to focus on boosting the economy in earth-quake damaged regions, expanding military strength and increasing the domestic employment rate, CNA said.