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Textile heavyweight supports central bank's currency intervention

Post Date 2020.10.14From:Focus Taiwan By Tsai Peng-min, Pan Tzu-yu and Frances Huang

(CNA) Far Eastern New Century Corp., one of Taiwan's leading textile manufacturers, on Wednesday voiced its support for the central bank's intervention in the foreign exchange market aimed at capping the Taiwan dollar's appreciation.

In a statement, Far Eastern said the central bank's efforts to stabilize the Taiwan dollar are among the critical elements driving the export-oriented local economy.

The corporation added that it fully supports the central bank's measures to boost Taiwan's global competitive edge and it also has a good understanding of the international pressure the bank faced when it took action to intervene in the forex market.

The statement was issued after local media cited Far Eastern Chairman Douglas Hsu (徐旭東) as saying earlier in the day that the central bank's market intervention would influence how other countries perceive Taiwan.

The news outlets interpreted Hsu's comments as urging the central bank not to intervene in the local forex market, according to Far Eastern.

Instead, Far Eastern said, Hsu had limited time to talk when questioned by reporters about his comments on the central bank's market intervention, adding that this failed to allow him to express comprehensive opinions about the issue.

The company said a sharp hike in the Taiwan dollar's value against the U.S dollar, mostly in September, came from large foreign fund inflows into the country, adding that volatile fluctuations of the local currency have been very hard on the local economy, so Far Eastern sided with the central bank in its fight against sudden foreign fund inflows to protect Taiwan's economy.

In September, the U.S. dollar fell about 1.38 percent against the Taiwan dollar. So far this month, the greenback dropped an additional 0.58 percent against the local currency, with the American unit falling below the NT$29 mark on Oct. 7 for the first time in nine years.

On Wednesday, the U.S. unit rose NT$0.032 against the Taiwan dollar to close at NT$28.952.

Dealers said the strength of the U.S. dollar came after foreign institutional investors sold a net NT$6.63 billion (US$229 million)- worth of shares on the local main board.

In addition, the central bank jumped into the market in the late trading session, propping up the greenback further and dealing another blow to the Taiwan dollar, dealers added.

The dealers said ample liquidity and Taiwan's healthy economic fundamentals are paving the way for further appreciation of the local currency.

Last week, the central bank admitted that its intervention to bolster the U.S. dollar was one of the factors to boost the country's foreign exchange reserves to a new high as of the end of September.