Taiwan: Stocks fall slightly; US keeps country on currency monitoring list
[TAIPEI] Taiwan stocks fell slightly on Monday, largely tracking regional shares and unnerved by the US Treasury's decision to keep Taiwan on a monitoring list for its trade practices.
The US Treasury last week maintained that Taiwan's material current account surplus merited Taiwan to stay on its monitoring list, though it dropped a second criterion that Taiwan had met in October of one-sided intervention in foreign exchange markets.
"Treasury urges Taiwan's authorities to demonstrate a durable shift to a policy of limiting foreign exchange interventions to only exceptional circumstances of disorderly market conditions," it warned.
As of 0338 GMT, the main TAIEX index was down 0.16 per cent at 9,717.28, after closing 1.1 per cent lower in the previous session.
The electronics subindex was 0.04 per cent lower, while the financial subindex was down 0.55 per cent.
Among actively traded stocks, Cathay Financial Holding, which is engaged mainly in the financing businesses, dipped 0.84 per cent.
In response to the US Treasury's decision, Harry Yen, director-general of the central bank's foreign exchange department, told Reuters on Saturday that it may be difficult for Taiwan to fix its current account surplus.
"The United States estimated the amount of intervention accounted for 1.8 per cent of GDP; the other criterion is related to Taiwan's high savings rate, so there's no way to satisfy that," Mr Yen said.
Nevertheless, focusing on a bright spot, analysts said Taiwan's efforts to let its currency strengthen paid off in the US Treasury's decision to drop the foreign exchange intervention criteria, but cautioned the trend may not last.
"From the beginning of this year, the Taiwan dollar has already strengthened quite a lot, but it likely won't go much further as the impact will be on our exports," said Tony Chen, a FX strategist at Taishin Financial Holdings.
"In Q2, we might even see some depreciation," he added.
On Monday, the Taiwan dollar strengthened NT$0.082 to stand at NT$30.318 to the US dollar.
REUTERS
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