Expanding Surplus but Weaker Taiwan Dollar
Central Bank Governor 楊金龍 on 28日 led officials to the Legislative Yuan for a business report. DPP legislator 吳秉叡 questioned that under international trade theory, the currency of a surplus country should appreciate to balance trade, while our surplus with the US has continued to grow, having exceeded 2千億 last year and possibly rising higher this year, yet the Taiwan dollar against the US dollar has recently been relatively weak. 楊金龍 responded that it is mainly because foreign investors have made substantial profits in Taiwan and need to regularly take profits, so funds move in and out on a large scale, causing depreciation. He noted that the stock market rose all the way from 27000多點 to 49000多點 this year, with most gains in chip and electronics stocks, which happen to be targets where foreign investors hold larger stakes. 吳秉叡 asked whether it was related to higher US interest rates, and 楊金龍 said US dollar rates have always been higher than Taiwan's because inflation is more severe than in Taiwan, not just this year.
Inflation Perceptions and Exchange-Rate Management
KMT legislator 賴士葆 questioned that the consumer confidence survey released by 中央大學 plunged 10.81點 for durable goods, including real estate and automobiles and motorcycles, and that a 110元 lunch box can no longer buy much, with everyone feeling prices rising. 楊金龍 responded that the durable goods mentioned by 賴士葆 account for only 1.627% weight in inflation, with little impact. 賴士葆 pressed that inflation has now exceeded 2%, and 楊金龍 responded that 2% is a reference value.
賴士葆 asked whether there is a 楊金龍 defense line for the exchange rate, as the central bank has already intervened in the foreign exchange market, whether he worries about exchange-rate volatility from foreign selling of stocks, and whether vulture attacks are involved. He also raised concerns about recent heavy foreign net selling of Taiwan stocks of 2兆. 楊金龍 clarified that he has never had any so-called defense line, but the central bank's foreign exchange operations follow the willow tree theory, allowing the market to sway and conducting appropriate adjustment only if swings become too large, and he currently believes there are no vultures in the market, with fund flows still in line with market norms. 賴士葆 noted that our country has been designated by the US as a currency manipulator, while 楊金龍 said communication between the central bank and the US Treasury is quite good.
Foreign Reserves and Sovereign Fund
KMT legislator 林德福 said some countries very much hope Taiwan will establish a sovereign fund, while our foreign reserves are a strong advantage, and although President 賴清德 has said a sovereign fund should be established, policy autonomy should be preserved and foreign reserves should not be easily diverted. 楊金龍 only responded that our country has the strength to establish a sovereign fund.