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Weaker yen unlikely to hit Taiwan's exports: UBS bank (update)

Weaker yen unlikely to hit Taiwan's exports: UBS bank (update)

Taipei, Jan. 22 (CNA) A weaker Japanese yen is unlikely to affect Taiwan's exports significantly because Taiwan's exporters generally do not directly compete against Japanese companies, an analyst at Swiss bank UBS AG said Tuesday. "Taiwan is just part of the global supply chain and does not make many end products when compared with Japan," said Pu Yonghao, managing director and regional chief investment officer for Asia-Pacific at UBS. "Although a weaker yen may have some impact on Japan's neighboring countries, I don't think Taiwan will be affected significantly since its industrial sector does not overlap much with Japan's," he told a media briefing in Taipei. Pu added that the falling yen may have a greater impact on South Korea's exports than Taiwan's in the near term, given that South Korea and Japan compete more directly across many sectors. Japan's currency hit 90.25 yen to the U.S. dollar on Monday, the weakest level since June 23, 2010. It was trading at about 80 to the greenback as recently as early November but has depreciated nearly 8 percent since the Liberal Democratic Party won a majority in Japan's parliament on Dec. 16. Japan's new prime minister, Shinzo Abe, has driven the yen's depreciation by calling for a higher inflation target and pushing a 20.2 trillion fiscal stimulus program. The new stimulus plan, announced on Jan. 11, was Japan's biggest since the 2008 financial crisis. Technically speaking, Pu said, Japan's currency should depreciate sharply because the country is saddled with debt and its economy is slowing. He has forecast Japan's currency to hit 92 yen to the U.S. dollar this year, but he contended that the government's emphasis on a weaker currency would not be enough to boost Japan's economic growth. "If Japan's enterprises continue to lag in innovation and fail to increase their workers' productivity, the country will find it hard to restore its economic prestige," he said. Asked about UBS's economic forecasts for Taiwan and China, Pu said Taiwan's gross domestic product growth would reach 3.5 percent this year thanks to improving exports, and he pegged China's growth at 8 percent based on expanded consumption and investment. (By Jeffrey Wu)


Updated : 2021-01-19 20:30 GMT+08:00