Does this article make sense? taipeitimes.com/News/worldbi … 2003269000
Quote: “Lehman forecasts the Korean won will rise by about a fifth to 810 per dollar by the end of this year. The New Taiwan dollar will strengthen 28 percent to NT$23, the Singapore dollar will climb 22 percent to S$1.30 and Thailand’s baht may rise 20 percent to 33 to the US currency, Subbaraman said.”
[Editted] Yee-ha!
[quote=“KawasakiRider”]If the NT is already at 32, how can it rise to 23 against the US dollar? Isn’t that a decline?[/quote]1/23 is bigger than 1/32
It would then only cost NT$23 to buy a dollar, as opposed to NT$32 before. So the NT would be rising in value, as you can buy more with it for less.
Hurray!
Ah! I get it! Had a brain fart there for a second. :loco: Was thinking the reserve. Dam, if its true than it looks like I’ll be keeping my money in NTs for awhile.
Economists… They can be completely wrong for all the right reasons
Give me 5 economists, and i will give you 5 forecasts.
That’s an estimate and it would most like lead to some panic selling of NT$ - after all if the US$ goes thru the floor, we are looking at a worldwide depression.
As usual our “economists” have everything the wrong way round. This is not a “strengthening” of the NT dollar, but a weakening of the US dollar. The difference in emphasis is important.
As someone once said, there is no point in writing a book that says Elvis is dead. Twenty-three percent my arse.
Not surprising in the least, really. The housing bubble in the U.S. seems to be bursting at last. The Economist pointed out in June that this could trigger a major recession there, since many of the jobs in the recovery are for building contractors, and since most of the “wealth” people have been spreading around has been from home equity lines of credit (that was partly how I survived while prepping my place to sell) and realty-flipping and similar dodges.
If the fit hits the Shan, the U.S. economy will be in the doldrums for five to ten years as things get straightened out. Moreover, with the USD sinking further against world currency markets, oil prices will shoot up, further hurting the economy there.
China’s limited floating of their currency a month or two back was another bad thing for the U.S., IMHO.
In my opinion, the big mistake they’ve made in the US is not to increase interest rates… they have been getting into more and more debt.
Normally its when inflation increases that interest rates increase, however inflation has been kept low due to cheap Chinese supply.
Early next month, Mr Greenspan will need to face a problem… if he doesn’t increase interest rates the rate of spending will continue. Normally this spending would be naturally curbed by the devaluation of the currency, but with the Yuan pegged to the Dollar, the cost of imports remains the same.
The problem for the US regarding the pegged Yuan is that they must compete in this lopsided situation for exports. China has no desire to revalue since the margin that they revalue by will decrease the value of its foreign reserves. Their economy is also built for exporting which any revaluation would hurt. The only thing that will make China revalue is if inflation hits. (which I can’t see happening)
If he does increase interest rates it risks slowing the US economy.
If I were Mr Greenspan, I would increase interest rates. I believe the world economy would have slowed down along time ago if it weren’t for China.
In about 20-30 years the US will be the poor house of the world. :raspberry:
When it’s true that the NT$ will strengthen then it’s time for Taiwan to start panicking.
[quote=“belgian pie”]In about 20-30 years the US will be the poor house of the world. :raspberry:
When it’s true that the NT$ will strengthen then it’s time for Taiwan to start panicking.[/quote]
I highly doubt that the US will be the poor house of the world in 20-30 years. They are very adaptable and will simply reshape the way their economy works. Whilst China is certainly going to “catch up”, I’m sure you’ve seen that after 30 or so years of capitalism, Taiwan still has much catching up to do.
China also faces far bigger problems than Taiwan or the US… but thats for another post.
And as for Taiwan, I think that the the real problem for Taiwan isn’t really the strengthening of the NT, (although that will hurt)… the real problem is that they can’t really do much that China can’t also do. The problem facing manufacturing based economies is always going to be the next China, or Vietnam or India… as manufacturers will always move to the cheapest environment to reduce costs…
They need to somehow pull off a Hong Kong or Singapore as these countries effectively switched to more service based economies. (Although they are both ex-British colonies and gained all the benefits that come with that… such as speaking english).
Look at what happened to Japan… economists point at all kinds or reasons their economy is languishing, but I believe its because their culture is so unique, they have major difficulty doing anything more for the world than producing a “product”. Being at the top of the manufacturing food chain is always going to be hard as you must have the top products, branding and technology.
Most economists get a bad rap. Economics is a worthy analytical and social science. But these forecasts are really funny. Based on the fundamentals, I do not really think the TWD will strengthen that much. The island’s goods trade surplus with the US has been narrowly quickly and is at USD 5.471 billion for 2005 till June.
The TWD will get stronger (from today 29/8/2005) by the end of 2006 as the article suggests. But the forecast is way too strong. It takes more than the fundamentals to move fx markets. Foreign central banks which hold large positions in USD and US Treasuries will not allow 30% depreciation in the USD unless China were to allow a 30% appreciation of the Yuan (which is not going to happen). Even the NDF market thinks a 30% Yuan appreciation is a joke. Also a trade-weighted 30% USD drop in the next 12-15 months would send the US into a recession and thereby drag the world into it.
Ever since that article came out the NT$ has weakened. Maybe that company that put out the report had a large NT$ position to get out of. That happens all of the time in the stock market. Each time someone says some stock is going to go up even more, then you know it is a good time to get out.
Sounds very probable.
Massaging the market is very normal in asia - and to some extent in the rest of the world as well.
Yep, I remember there was a similar prediction by another investment house last year, around the same time, I think.
NT has DROPPED to its lowest level in more than 8 months now, currently trading at over 32.7 to the US$.
Not good if you’re making loan repayments home. In fact, it seems that pretty much all the currencies the majority of users of Forumosa would be interested in: AUD, NZD, Euro, CAD, ZAR have APPRECIATED against the US$ in the last week. But the NT, and Yen to a smaller degree, have bucked the trend.
http://ichart.finance.yahoo.com/1y?usdtwd=x
Tell me this isn’t due to government intervention trying to keep the currency weak to boost exports. One thing I do know: there ain’t no way the government is going to let the NT rise above 28-29 anytime soon.
Reason the TWD is having problems strengthening against the USD is trade data, interest rate differentials, and technical sentiment. Other currencies have better things going for them right now than the TWD/USD.
I think the TW govt is not trying very hard to weaken the TWD. Trade data for exports has not been that great in the last few months and petroleum import costs are rising more than some other nations such as South Korea due to the TWD not strengthening against the USD as much.
If the TWD/USD were to get near 30.50 the CBC would probably step in to slow the advance. But stop the advance, no i do not think so.