Chen victory? Effect on exchange rates?

Business Money
1

It’s looking possible that Chen Shuibian might just win this election. If Chen were to win, which only recently is starting to look like a realistic possibility, cross-strait relations could get a bit interesting. And this could possibly affect the NT’s exchange rate.

I’ve got a little bit of savings in NT$, probably as much as your average English teacher whose had to deal with ridiculous visa run fees can expect after several months of teaching. Do you think there would be any advantage to exchanging it to dollars/euros/whatever before 3/20?

What are other people doing, if anything?

On a related note, how exactly is the NT$ tied to the American dollar? I’ve done some Google searches, but can’t find anything useful. I’ve heard that both are loosely tied, but I’ve noticed that the NT$ is appreciating rather nicely against the dollar recently.

2

Unless a shooting war starts after the election, any effects should be mild. If your savings are small, then keep them here. After al the US dollar looks as it’s in for some more weakness on the back of the US trade decifit, budget decifit etc.

The NT$ follows the US$ loosely only, the Central Bank intervenes at times, with the most notable example being 1997, where they sold US$ and delayed currency transactions out of Taiwan as much as they could.

However, it’s not a firm peg like the HK one, but more like a shadowing helped by a bit of nudging once in a while. As a matter of fact, they have allowed the NT$ to appreciate and depreciate sharply, depending on the national interest at the time.