NT$ rebounds after Trump jawboning on dollar

New Taiwan Dollar rises after U.S. President Donald Trump's tanks U.S. dollar for being too strong

A person holding a stack of NT$100 bills. (By Central News Agency)

TAIPEI (Taiwan News)—Asian currencies including the New Taiwan Dollar (NT$) appreciated on Thursday after U.S. President Donald Trump's abrupt remark about  "the U.S. dollar (US$) is getting too strong.”

"It's very, very hard to compete when you have a strong dollar and other countries are devaluing their currency," Trump told Wall Street Journal reporters.

Trump's preference for a weaker greenback, led the USD index to slump 0.7 percent, while Asian currencies exchange rates, including export orientated Taiwan saw currency rise 0.9 percent to NT$30.28 to US$1, reported Bloomberg.

Among Asian currencies surge, the Korean Won rose the most with 1.2 percent, while the NT$ was up 0.9 percent, and the Indian rupee ranked third with 0.5 percent hike.

If the NT$ to US$ exchange rate skyrockets to NT$20 vis a vis US$1 it can be troublesome for the island’s high-tech industries that are highly reliant on export revenues, such as the world’s largest semiconductor contract chip maker Taiwan Semiconductor Manufacturer Co. (TSMC).

"We might need help from Taiwan's Central Bank if our revenue is to reach the trillion NT$ mark in 2017,”said TSMC at a meeting Thursday.

The chipmaker estimated that sales revenue will fall 9 percent, due to the stronger NT$ this quarter, declining to NT$213 billion and NT$216 billion compared to last quarter's NT$233.91 billion.

TSMC Chief Financial Officer Lora Ho (何麗梅) estimated for every 1 percent increase in the NT$ against the US$, the company revenue would drop 1 percent, and its gross margin and operating margins would down 0.4 percent.

Micro-Star International (微星科技) Chairman Joseph Hsu also commented currency exchange trends are out of enterprises control, and the appreciating NT$ will affect many technology companies profitability this year.

Trump said ahead the meeting with Chinese leader Xi Jinping (習近平) that China is not a currency manipulator, and relations between the two countries has become more friendly since the meeting, analyzed Fubon Financial chief economist Rick Lo (羅瑋).

The developments eased global concerns of a trade war breaking out between China-U.S, since the U.S. will need to win over China’s support in addressing North Korean issues, he added.

A foreign currency exchange trader noted the NT$ increased over the last three days by a total of NT$0.33, and noted there has been a surge of foreign investments entering Taiwan lately leading to the currency's appreciation.

The trader analyzed the changes might be caused by international investment banks and exporters selling foreign currencies, and the upcoming U.S. Treasury Department's semi-annual Report to Congress on International Economic and Exchange Rate Policies to be issued on April 15, 2017.

The trader projected the NT$ will continue to grow strong if more foreign investments pour into the country.

Trump's recent remarks will also impact the U.S. Federal Reserve System (FRS) decision on whether to adhere to the U.S. president's preference of keeping interest rates low, he added.

It is estimated the NT$ will continue to rise in the short-term and might reach a height of NT$31.2 for every US$1.