TWD upswing more bad news for machine tool exporters
By Kathryn Chiu, The China PostTAIPEI, Taiwan -- Accelerated appreciation of the New Taiwan dollar has again frustrated local machine tool exporters, who complain that they will be especially vulnerable if the central bank keeps dragging its feet in the face of a ballooning exchange rate.
September 18, 2013, 12:11 am TWN
After the New Taiwan dollar recently ended the trading day below NT$29.7 against the U.S. dollar, the central bank's bottom line is believed to have been moved up to NT$29.5, dealers said.
Taiwan's machine tool exporters again voiced support of monetary depreciation, telling local media that they will be forced to surrender many orders to Japanese competitors in the fourth quarter — the traditional peak season for Taiwan's exporters — due to the continued depreciation of the Japanese yen and the appreciation of the New Taiwan dollar.
Hsu Shu-chang (徐秀滄), the chairman of the Taiwan Association of Machinery Industry (TAMI,台灣區機器工業同業公會), is alleged to have questioned central bank Deputy Governor Chin-Long Yang (楊金龍) about the local unit's bottom line against the U.S. dollar in a public hearing hosted by Premier Jiang Yi-huah (江宜樺).
Hsu said that since early 2013, TAMI has repeatedly urged expedited depreciation of the New Taiwan dollar to NT$31-32 in order to give local exporters a competitive edge against their Japanese and South Korean rivals.
Hsu said that since 2007 the New Taiwan dollar has risen over 10 percent against the greenback, while the South Korean won has dropped 26 percent.
Taiwan's electronics and semiconductor products face competition mostly from South Korean companies, and the tool industry's main competitors come from Japan.
According to the United Evening News, Yang replied bluntly to Hsu in a public hearing that exporters can't expect to rely on currency depreciation to boost company growth.
“Improvements to productivity and efficiency are the right way to go when it comes to external competitiveness,” Yang said.
He stressed that the New Taiwan dollar has depreciated 2.31 percent so far this year, while the won only depreciated 1.4 percent in the same period.
“The public will have to pay for the New Taiwan dollar's depreciation since it will largely push up the cost of imports and lead to inflation,” Yang added.
Bleak Outlook for
Machine Tool Exports
Fair Friend Group (FFG, 友嘉集團) Chairman Chu Chih-yang (朱志洋) said on Monday that Japanese machine tool companies have won large amounts of orders thanks to a weak yen. FFG is Taiwan's largest machine tool exporter.
Joint ventures formed by his group and several Japanese companies, including Takamatsu and Marubeni, have posted strong numbers since July this year, with growth rates reaching 50-100 percent, Chu said, adding that those joint ventures have also seen continued declines in their inventories.
In contrast, he said, Taiwan-based machine tool companies have seen their orders drop by more than 30 percent this year.