Category: Market

Joining a growing list of institutions cutting their forecasts of Taiwan’s economy growth, Singapore-based DBS Bank has cut its estimate of the country’s gross domestic product (GDP) rise to 3.4 percent for 2022, citing the impact of rising inflation and monetary policy tightening by the U.S. Federal Reserve.

 

In a statement released on Thursday, DBS said it has revised downward Taiwan’s GDP growth forecast for 2022 from an expected 3.8 percent made in April, while the banking group has forecast the country’s consumer price index (CPI) for 2022 will grow 3 percent, well above the 2 percent alert level set by the local central bank.

 

This week, Academia Sinica, the top research institute in Taiwan, has lowered its forecast from 3.85 percent to 3.52 percent for 2022, while the Chung-Hua Institution for Economic Research (CIER), one of the leading think tanks in Taiwan, has also cut its forecast from 3.96 percent to 3.56 percent.

 

In late May, the Directorate General of Budget, Accounting and Statistics (DGBAS) lowered its forecast of Taiwan’s GDP growth to 3.91 percent from 4.42 percent, citing weakening private consumption. The DGBAS is expected to update its forecast in August.

 

Rising inflation

In the statement, Ma Tieying (馬鐵英), a senior economist with DBS, said the Russian invasion of Ukraine has boosted Taiwan’s inflation with prices for energy, grains, meat and eggs on the rise.

 

In June, Taiwan’s CPI rose 3.59 percent year-on-year, the highest level in nearly 14 years, but the DGBAS expects the growth will be moderating for the rest of the year.

 

Echoing the DGBAS, Ma said Taiwan’s CPI growth could peak in June and it is possible for the growth to moderate to below the 3 percent mark by the end of this year, but she said she remained cautious about uncertainties from international energy and grain prices as well as electricity tariff adjustments in the second half of this year.

 

Ma said she was also concerned over the Fed’s tightening as rate hikes have created downside risks in the U.S. economy, the world’s largest. According to DBS, the U.S. market was one of the major buyers of Taiwan-made goods and accounted for 30 percent of Taiwan’s total exports in 2021.

 

Supply chain interruptions

In addition, Ma said China’s lockdowns on many of its industrial cities such as Shanghai, Kunshan and Suzhou, against COVID-19 infections have sent higher-than-expected interruptions to the global supply chain.

 

The economist said while many Taiwanese manufacturers have sought to diversify their production, China remained the largest offshore production site for Taiwan and the biggest destination for Taiwan-made goods.

 

Ma said a spike in domestically transmitted COVID-19 cases in Taiwan also took a toll on private consumption, in particular during April-May, but due to a higher immunity along with the government’s possible move to further ease border control, Taiwan’s private consumption will bottom out at the end of the third quarter and continue to recover in the fourth quarter.

 

DBS has anticipated Taiwan’s GDP will grow 3 percent, 4.5 percent, and 2.8 percent, respectively, in the second, third and fourth quarter of this year.

 

Ma said Taiwan’s economy will likely depend on a recovery in private consumption in the second half of this year, while the country’s exports and investments could be affected by slower global demand for tech items.

 

Compared with neighboring economies

Despite a cut in Taiwan’s GDP forecast for 2022, Ma said Taiwan is expected to outperform South Korea and Hong Kong, the economies of which are expected to grow by 2.8 percent and 1.2 percent, respectively, as Taiwan’s central bank is expected to continue its mild approach to raising its key interest rates.

 

In addition, as Taiwan’s semiconductor industry has a more diversified product mix from memory chips to high performance computing devices to chips used in the Internet of Things, Taiwanese semiconductor suppliers are expected to remain resilient to weakening global demand, Ma said.

 

Taiwan, however, is likely to trail behind Singapore, where GDP growth is expected to hit 3.5 percent, according to DBS.

 

As for 2023, DBS has also lowered its forecast of Taiwan’s GDP growth to 2.8 percent from 3 percent, while anticipating the CPI growth will hit 1.8 percent.

 

 

 

Source: Focus Taiwan News Channel

Shares in Taiwan closed slightly higher Friday, as investors sought to lock in their profits, ahead of the psychological barrier of 15,000 points on the main board, dealers said.

Market sentiment remained haunted by worry over how the United States Federal Reserve might respond next week to a 9.1 percent year-on-year spike in the American consumer price index in June, dealers said.

The Taiex, the weighted index on the Taiwan Stock Exchange (TWSE), ended up 11.66 points, or 0.08 percent, at 14,949.36, after moving between 14,902.32 and 14,966.24. Turnover totaled NT$262.64 billion (US$8.78 billion).

The market opened up 0.10 percent on follow-through buying from the previous session, and it hit the day’s high early in the session, following gains on the U.S. markets Thursday, dealers said.

Large-cap semiconductor stocks, however, saw profit taking, as the Taiex moved closer to 15,000 points, but contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC) remained above its previous closing level, lending support to the broader market until the end of the session, dealers added.

“There are high technical hurdles ahead of 15,000 points, which is a critical psychological level,” Hua Nan Securities analyst Kevin Su said. “That’s why many investors refrained from chasing prices today, fearing a pullback.”

TSMC, tech stocks

TSMC stock benefited from hopes that the U.S. Congress will soon pass a bill to provide subsidies for semiconductor companies operating there, Su said.

TSMC, which is building a 12-inch wafer plant in Arizona at a cost of US$12 billion, saw its shares rise 0.40 percent Friday to close at NT$503.00, after coming off a high of NT$505.00.

“The stock may go into consolidation for some time, at around the NT$500.00 mark,” Su said.

Many other semiconductor stocks, meanwhile, closed in negative territory Friday, as investors moved to the sell side for profit taking.

Among them, United Microelectronics Corp. fell 0.82 percent to end at NT$42.45, smartphone IC designer MediaTek Inc. dropped 1.54 percent to close at NT$705.00, and application-specific IC (ASIC) designer Alchip Technologies Ltd. shed 1.88 percent to end at NT$678.00.

Su said iPhone assembler Hon Hai Precision Industry Co. also lent some support to the broader market, rising 0.47 percent to close at NT$106.00, amid optimism about its efforts to develop electric vehicles.

PC brand Acer Inc. also saw some gains, rising 1.57 percent to end at NT$22.65, as its subsidiary Acer E-Enabling Service Business Inc. prepares to launch an initial public offering on the over-the-counter market next month.

Mixed performances in other sectors

“While many old economy stocks appeared quiet today, Uni-President and President Chain Store continued to attract strong interest, after they reached a deal Thursday on the full acquisition of Carrefour Taiwan, which is expected to boost their bottom line,” Su said.

Food brand Uni-President Enterprises Corp. rose 2.50 percent to close at NT$69.60, and its affiliate President Chain Store Corp., which owns the 7-Eleven convenience store chain in Taiwan, gained 4.39 percent to end at NT$297.50.

In other sectors, Formosa Plastics Corp. lost 1.01 percent to close at NT$87.90, and Formosa Petrochemical Corp. dropped 0.84 percent to end at NT$82.60, after a fall in international crude oil prices overnight.

Textile brand Far Eastern New Century Corp. fell 0.77 percent to close at NT$32.15, and Eclat Textile Co. dropped 2.56 percent to end at NT$437.50.

In the financial sector, Cathay Financial Holding Co. lost 0.11 percent to close at NT$45.00, while Fubon Financial Holding Co. ended unchanged at NT$58.40.

“While the market is expecting the Fed to raise its key interest rates by 75 basis points next week, investors remained anxious, waiting for clues on what it might decide in its next meeting in September,” Su said. “Moreover, the ongoing earnings season in the Taiwan and U.S. markets is expected to continue to move share prices.”

According to the TWSE, foreign institutional investors sold a net NT$4.02 billion worth of shares on the main board Friday.

Source: Focus Taiwan News Channel

Shares in Taiwan recovered from earlier losses to close in positive territory Thursday, although the United States reported higher-than-expected inflation data overnight, which caused the initial downturn here, dealers said.

The bellwether electronics sector led the rebound as large-cap semiconductor stocks, in particular contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC), bounced back from their opening lows, while the financial sector moved below its previous closing throughout the session, they said.

The Taiex, the weighted index on the Taiwan Stock Exchange (TWSE), ended up by 113.84 points, or 0.79 percent, at 14,438.52, after moving between 14,159.39 and 14,450.47. Turnover totaled NT$208.999 billion (US$6.99 billion).

The market opened down by 0.51 percent and fell further to reach the day’s low in the early morning session in a knee-jerk reaction to the news that the latest U.S. consumer price index (CPI), for June, had hit 9.1 percent, the highest since 1981, dealers said.

With the Taiex dipping below the nearest technical support of around 14,200 points, some investors engaged in buying, rushing to pick up tech stocks including TSMC as well as select old-economy stocks, helping the broader market overcome its earlier weakness, they said.

“Despite the high inflation data in June, many investors in the U.S. markets appeared to be composed, perhaps thinking that the June CPI growth represented the peak as prices of crude oil and other commodities like soybean and wheat have been on the decline,” Mega International Investment Services Corp. analyst Alex Huang said. “So, the major indexes there simply recovered from their lows overnight.”

On Wednesday, the Dow Jones Industrial Average fell by 0.67 percent and the tech-heavy Nasdaq index edged down by only 0.15 percent after the release of June’s CPI data, while the Philadelphia Semiconductor Index performed better, rising by 0.75 percent.

“In Taiwan, the market initially reacted to the U.S. inflation news by incurring losses but the mild reaction in the U.S. to the June CPI data prompted local investors to hunt for bargains, especially semiconductor heavyweights,” Huang said.

The electronics sector rose by 1.09 percent to close at 663.35, up from a low of 647.42, with the semiconductor sub-index rising by 1.15 percent after TSMC, the most heavily weighted stock in the local market, rose by 0.96 percent to close at NT$475.00, up from a low of NT$463.00.

TSMC’s gains came before the chipmaker released its second-quarter results, with the company posting a record high of NT$237.03 billion in net profit for the April-June period, up 16.9 percent from a quarter earlier and also up 76.4 percent from a year earlier.

Among the other semiconductor stocks that came off their lows were smartphone IC designer MediaTek Inc., which rose by 1.89 percent to end at NT$646.00; United Microelectronics Corp., a smaller contract chipmaker, increased by 1.97 percent to close at NT$38.80; and IC packaging and testing services provider ASE Technology Holding Co. rose by 2.89 percent to end at NT$78.40.

Also in the electronics sector, iPhone assembler Hon Hai Precision Industry Co. rose by 2.44 percent to close at NT$105.00, and Largan Precision Co., a supplier of smartphone camera lenses to Apple Inc., increased by 2.42 percent to close at NT$1,905.00.

Bucking the upturn, Hon Hai’s metal casing subsidiary Foxconn Technology Co. fell by 0.53 percent to close at NT$46.80, while power management solution provider Delta Electronics Inc. ended unchanged at NT$239.50.

The financial sector underperformed the broader market as investors remained wary of their reduced asset values in the wake of falling prices of bonds they own overseas, Huang said.

In the financial sector, which fell by 0.89 percent, Fubon Financial Holding Co. fell by 0.68 percent to close at NT$58.30, Mega Financial Holding Co. dipped by 0.86 percent to end at NT$34.55, and Cathay Financial Holding Co. fell by 1.10 percent to close at NT$45.00, but CTBC Financial Holding Co. ended up by 0.23 percent at NT$22.25.

“Many old economy stocks followed their tech counterparts in recovering from lows. The transportation sector did well today but the gains were technical in nature as demand for cargo shipping services has weakened,” Huang said.

Buying rotated to container cargo shippers from airline stocks with Evergreen Marine Corp., the largest container cargo shipper, rising by 4.02 percent to close at NT$90.60, and rivals Yang Ming Marine Transport Corp. and Wan Hai Lines Ltd. climbing by 4.29 percent and 4.41 percent, respectively, to end at NT$87.50 and NT$118.50.

However, China Airlines closed unchanged at NT$23.15, and EVA Airways dipped by 0.30 percent to end at NT$32.90.

“The earnings season in Taiwan and the U.S. has just kicked off and investors must pay close attention since the results, in particular those of tech firms, will move the markets,” Huang said.

According to the TWSE, foreign institutional investors bought a net NT$571 million worth of shares on the main board Thursday.

Source: Focus Taiwan News Channel

Taiwan Semiconductor Manufacturing Co. (TSMC), the world’s largest pure play wafer manufacturer, on Thursday reported a record high net profit for the second quarter, while its gross margin climbed higher to beat its previous estimates.

In a statement released after the local stock market closed, TSMC said its net profit for the April-June period was NT$237.03 billion (US$7.93 billion), up 16.9 percent from the previous quarter and 76.4 percent from a year earlier.

The company reported a quarterly record NT$9.14 in earnings per share for the second quarter, compared with NT$7.82 in the first quarter and NT$5.18 a year earlier.

Its second-quarter gross margin — the difference between revenue and the cost of goods sold — exceeded its most recent guidance of between 56.0 percent and 58.0 percent, rising to 59.1 percent, from 55.6 percent in the first quarter and 50.0 percent a year earlier.

TSMC’s consolidated sales also beat its estimate, totaling US$18.16 billion in the second quarter. In Taiwan dollar terms, the company’s second-quarter consolidated sales rose 8.8 percent from a quarter earlier to NT$534.14 billion. In its guidance in April, TSMC had estimated the figure at between US$17.6 billion and US$18.2 billion.

Mega International Investment Services Corp. analyst Alex Huang said one of the factors that contributed to TSMC’s higher than expected second-quarter results was a weaker Taiwan dollar, which gave the chipmaker an edge in the global market.

Huang added TSMC also benefited from its improving product mix, which gave more weight to its high-end processes.

Chips on the 7 nanometer process accounted for 30 percent of TSMC’s total sales in the second quarter, while its latest commercial technology, its 5nm chips, made up 21 percent.

Its 5nm and 7nm chips together accounted for 51 percent of its total revenue in the second quarter, compared with 50 percent in the first quarter.

According to TSMC, second-quarter sales generated from its Internet of Things and automotive electronics operations rose 14 percent from a quarter earlier, and revenue from its high performance computing device division grew 13 percent.

TSMC’s second-quarter sales from its consumer electronics device operations and smartphone division rose 5 percent and 3 percent, respectively, from a quarter earlier, it reported.

In the first six months of the year, TSMC’s net profit soared 60.5 percent from a year earlier to NT$439.76 billion, with an EPS of NT$16.96, while its gross margin was up 6.2 percentage points from a year earlier at 57.4 percent, the company’s data showed.

Source: Focus Taiwan News Channel

Migrant workers in Taoyuan can now sign up for free Chinese, English, and other life skill classes, with registration (available here) open until July 25, the city’s Department of Labor announced this week.

The Taoyuan City Government Migrant Workers Academy program, co-organized with the National Taiwan Sport University, is completely free of charge and offers Mandarin Chinese conversation and English conversation courses, as well as classes on cooking and financial literacy, the labor department said in a statement Wednesday.

The Mandarin Chinese conversation and English conversation courses will be composed of six four-hour sessions taught by bilingual instructors, with a focus on everyday conversation, the labor department said.

Meanwhile, the financial literacy classes will be composed of four hours covering things such as how to open a bank account, exchange foreign currency, and manage personal finances.

The food and life skills classes, meanwhile, will be composed of 15 3-hour classes on Taiwanese cuisine, general cooking, and other life skills.

For those interested in the program, registration needs to be completed online by July 25, after which times, and locations of the courses and classes will be confirmed, the labor department said.

The dates, locations, and times will be decided on depending on the number of people registering for a particular course or class, the labor department said.

Employers and brokers are encouraged to help promote the program and assist migrant workers in signing up, the labor department said.

Queries can be made to National Taiwan Sport University on (03)328-3201 extension: 8576 or 8577.

There was a total of 115,557 migrant workers in Taoyuan at the end of May, according to Ministry of Labor data.

Source: Focus Taiwan News Channel

The Pingtung Forest District Office will hold a series of eight events at which residents will be offered a cash bounty to help remove an invasive plant that has been nicknamed “mile-a-minute vine” and “green cancer” because of its rampant growth.

The Mikania micrantha vine thrives in humid, sunny climates and is commonly found in orchards and fallow fields and on mountainsides at elevations below 1,000 meters, the forestry office said in a press release.

Listed among the world’s 100 most invasive species, the vine grows densely on native plants and trees, smothering them by blocking their access to sunlight, the office said.

The mile-a-minute vine, as it is commonly called, is extremely hard to eradicate, as even small bits that fall to the ground can grow into new plants, the office said.

In a bid to control the spread of the “green cancer” before its blossoming season starts in winter, a series of eight events has been organized to pay residents NT$5 (US$0.17) for each kilogram of Mikania micrantha that they bring in from the wild, the forestry office said.

The “vines for cash” events will be held July 20 at the Majhou Township Office, July 27 at the Mudan Township Office, Aug. 5 in Laiyi Township’s Gulou Village, and Aug. 8 at the Jian Gong Community Activity Center in Shinpi Township, according to the office.

In neighboring Kaohsiung, the activities will take place Aug. 9 at Jingyi Elementary School in Neimen District, Aug. 11 at the Yuanfu Neighborhood Community Development Association in Qishan District, Aug. 15 at the Chung Hsing Neighborhood Activity Center in Liugui District, and Aug. 22 at the Long Hsing Neighborhood Office.

Apart from those events, cash bounties for destruction of the invasive species will also be paid year-round at Forestry Bureau offices in Kaohsiung’s Qishan and Liugui districts and in Chaochou and Hengchun in Pingtung, every Tuesday and Thursday, the office said.

Additional information on the scheduling and location of the events can be found on the Pingtung Forestry District Office’s Facebook page.

Source: Focus Taiwan News Channel

The committee of the National Stabilization Fund decided Monday not to enter the market to prop up share prices, which have been taking a beating amid worry over a more aggressive United States Federal Reserve monetary policy to deal with skyrocketing inflation.

In a statement released after the committee’s meeting, the Ministry of Finance (MOF) said that despite the external factors, Taiwan’s economic fundamentals remained sound and it was not necessary for the stabilization fund to intervene in the market at this time.

The NT$500 billion (US$16.77 billion) stabilization fund was set up in 2000 by the government to serve as a buffer against unexpected external factors that might disrupt the local bourse.

According to the MOF, there is no need right now for the fund’s intervention, as Taiwan’s exports are still growing, registering a 15.2 percent increase in June from a year earlier to US$42.2 billion, which was the 24th consecutive month of year-on-year growth.

In addition, the companies listed on the local main board and the over-the-counter market posted combined sales of NT$3.48 trillion for May, which was a monthly high, and the recent drop in share prices has made the local equity market attractive, the ministry said.

Furthermore, with the slowdown of the domestic COVID-19 outbreak, domestic demand is expected to improve, the MOF said.

The stabilization fund committee, however, will continue to keep a close eye on the market’s fluctuations, the ministry said.

Shares in Taiwan moved lower Monday, as investors appeared reluctant to chase prices ahead of the National Stabilization Fund committee meeting later in the day.

The Taiex, the weighted index on the Taiwan Stock Exchange, ended down 124.00 points, or 0.86 percent, at 14,340.53, and turnover on the main board dropped to NT$172.91 billion.

The local equity market, in line with its foreign counterparts, has been battered by worry about the Fed’s policies and a global recession, amid growing inflation and rising interest rates.

So far this year, the Taiex has tumbled 3,878.31 points, or 21.29 percent, and some investors had been hoping that the stabilization fund would intervene to prop up share prices.

The last time the fund intervened was March to October 2020, when investor confidence was being battered in a market roiled by the COVID-19 pandemic.

After the entry of the fund, the Taiex soared 4,274.57 points, or 49.24 percent, from a low of 8,681.34 on March 19 to 12,955.91 on Oct. 12.

The stabilization fund bought only NT$757 million worth of shares during that period, however, with contract chipmaker Taiwan Semiconductor Manufacturing Co. as its top pick, as the market was boosted largely by foreign fund inflows.

According to a forecast by the Directorate General of Budget, Accounting and Statistics (DGBAS), Taiwan is expected to record 3.91 percent economic growth in 2022.

While that was a downgraded forecast from the DGBAS’ earlier estimate of 4.42 percent, it was still higher than the 2.9 percent estimate for the global economy, as projected by global information services firm IHS Markit in May.

Source: Focus Taiwan News Channel

Heat advisories were in effect for 15 cities and counties on Sunday afternoon as sunny skies drove temperatures up above 36 degrees Celsius, according to the Central Weather Bureau (CWB).

The CWB said it had issued an “orange” heat alert cautioning that Hualien County could see temperatures of up to 38 degrees, while New Taipei, Tainan, Kaohsiung, Pingtung County, Yilan County, and Taitung County could experience 36-degree heat for three consecutive days.

A “yellow” heat alert, which warns of single-day temperatures of 36 degrees or above, was also in effect for Taipei, Taoyuan, Taichung, Changhua County, Nantou County, Yunlin County, Chiayi City and Chiayi County, the weather bureau said.

As of press time, Zhuoxi Township in Hualien had recorded the day’s highest temperature of 38.8 degrees, followed by Hualien’s Yuli Township with 37.9 degrees and Sandimen Township in Pingtung with 37.2 degrees.

Meanwhile, Banqiao District in New Taipei reported a high temperature of 37.1 degrees, while Taipei’s Neihu District hit 37.0 degrees, CWB data shows.

Adding to Sunday’s sweltering conditions were humidity levels hovering between 60-80 percent nationwide, a lack of cloud cover in most regions and relatively calm winds, according to the weather bureau.

Source: Focus Taiwan News Channel

Foreign Minister Joseph Wu (???) said he looked forward to working with Taiwan’s South American ally Paraguay to push bilateral ties further as the country’s new ambassador to Taiwan Carlos José Fleitas Rodríguez presented the minister with a copy of his credential letter on Friday.

Fleitas was appointed the Paraguayan ambassador to Taiwan in late April, to fill the position that had been left vacant for more than a year.

On Friday, the 57-year-old ambassador presented a copy of his credential letter to Wu, and the two exchanged views about bilateral cooperation on education, trade and investment, according to the Ministry of Foreign Affairs (MOFA).

Wu told Fleitas that Taiwan deeply valued its diplomatic relations with Paraguay and would work with the ambassador to continue boosting bilateral exchanges in a variety of fields and promoting people-to-people ties.

The two nations will mark the 65th anniversary of formal ties with each other next Tuesday. Meanwhile, Fleitas said Taiwan and Paraguay had taken similar paths to achieving democratization and both cherished fundamental values like freedom, democracy, and justice.

Fleitas said Paraguay would continue supporting Taiwan’s participation in international organizations and that he would be dedicated to promoting bilateral cooperation during his stint, according to the MOFA statement.

MOFA said Fleitas, who succeeded Marcial Bobadilla Guillen as the ambassador, has close ties with Taiwan, having previously served as minister counsellor at Paraguay’s embassy in Taiwan in 2010 and then as its chargé d’affaires in June 2012.

He also received a master’s degree in social sciences from New Taipei-based Tamkang University in 2017, MOFA said.

His most recent posting was as a consul in Curitiba, Brasil, where he had served since June 2018.

Paraguay is one of 14 countries with which Taiwan, known formally as the Republic of China, has diplomatic relations.

Source: Focus Taiwan News Channel

Yiting Li (???), an academician at Academia Sinica, the top research institution in Taiwan, on Friday urged the central bank to disclose the value of its market interventions in a bid to facilitate more accurate academic research.

Li, a newly elected academician and central bank board member, said currently the bank does not disclose any details about market intervention, so it is hard for scholars to obtain exact historic records about the bank’s interventions for their studies.

Li made the comments at a news conference after a closed-door forum on monetary and financial reform in Taiwan held by Academia Sinica’s Institute of Economics on Friday.

During the forum, Chen Nan-kuang (???), deputy governor of the central bank, and several monetary experts from the U.S. Federal Reserve Bank, exchanged views with Academia Sinica scholars about financial reform in Taiwan.

The Institute of Economics also presented a draft white paper in preparation for offering advice on financial reform.

Without any market intervention details, Li said, scholars have to use changes in the country’s foreign exchange reserves and the central bank’s foreign assets to estimate the value of market interventions.

This year, the Taiwan dollar has weakened against the greenback because of rate hikes by the U.S. Federal Reserve to fight inflation, so the central bank has stepped in to slow down the depreciation of the local currency, especially in March and April, and has admitted to doing so.

However, although the bank had said its intervention pushed down Taiwan’s forex reserves in those two months, it did not reveal exactly how much it spent selling greenbacks to buy Taiwan dollars.

As for forex reserves in June, the central bank admitted it intervened to cap the upturn of the U.S. dollar, but said only that its intervention was limited and had minimal impact on the value of forex reserves in the month.

In contrast, the central bank stepped in during most forex trading sessions in 2021 to limit the Taiwan dollar’s gains as the Fed kept pumping funds into the market, but never admitted to intervening, saying only that it had a responsibility to fight volatility and maintain market stability.

Li said central banks in 43 countries including Japan, South Korea and Singapore disclose market intervention data on a monthly or quarterly basis, while the U.S. Federal Reserve publishes its numbers two years after interventions.

Even if the local central bank disclosed its figures five years after intervening, that would be better than nothing, Li said.

At the news conference, Li called on the government to improve the central bank’s independence by giving it the ability to write its own budget.

At present, the central bank is viewed as a government-owned entity and has to submit its earnings to the treasury, which places pressure on the bank’s decision-making, Li said.

Li noted that she suspects the central bank tends to keep interest rates low and forex reserves high because it has to take into account the need to make itself profitable and submit its earnings to the treasury.

Under The Central Bank of the Republic of China (Taiwan) Act, the central bank has to set aside 50 percent of its net income as legal reserves.

Such a legal requirement for the central bank to submit its earnings to the treasury can undermine its independence, Li said.

Meanwhile, Wang Ping (??), another academician, said at the news conference that the central bank should come up with its own forward guidance as the Fed has done to improve its independence, accountability and transparency.

Such forward guidance enables the Fed to inform the public what the central bank will do to take on inflation when the consumer price index jumps to 8 percent, Wang said.

On its website, the Fed describes forward guidance as a tool that central banks use to communicate with the public about the likely future course of monetary policy, so individuals and businesses can use such information to make informed spending and investment decisions.

In addition to the need for forward guidance, Wang said, the central bank also needs a comprehensive data-analysis structure and a solid research foundation to improve decision-making.

By keeping interest rates low and underestimating the value of the Taiwan dollar, the central bank could undermine economic development, Wang warned.

Source: Focus Taiwan News Channel