The New Taiwan dollar has depreciated as foreign capital continues to remit money. Will exporters still hold on to higher prices such as US dollars? Cai Jiongmin, director of the Central Bank's Foreign Exchange Bureau, reminded today that after the U.S. midterm elections, the market should re-evaluate the Federal Reserve's policies and the trend of the U.S. dollar, and not "expect to sell at a better price." Manufacturers that have bonuses, dividends and other expenditure requirements for New Taiwan dollars at the end of the year should start to diversify their foreign exchange settlements to avoid waiting for the market to reverse and rush to sell U.S. dollars together.
Regarding market rumors that the central bank has relaxed the daily foreign exchange quota for exporters, Cai Jiongmin clarified that in the past, he mainly wanted manufacturers to diversify their transactions, not to restrict foreign exchange sales. "There was no restriction before, so there could be no relaxation."
Cai Jiongmin said that the end of the year has always been a time when manufacturers have a greater demand for US dollars to settle sales. This year's export revenue has increased, and the bonuses and dividends issued by some companies next year may also increase, and there will be more demand for New Taiwan dollar funds. Recently, banks have asked on behalf of manufacturers whether they can increase the amount of foreign exchange settlement. As long as there is clear actual demand, "we will say OK, no problem."
He pointed out that if manufacturers can start arrangements now, they do not have to wait until December or January next year for centralized foreign exchange settlement, otherwise it will easily cause greater fluctuations.
Recently, the question from the outside world is that exports are booming and corporate US dollar income is increasing. Why is there no corresponding strength in selling foreign exchange? Cai Jiongmin said that not all exporters hold on to US dollars and do not want to sell. The amount of foreign exchange settlement this year has actually increased compared with the same period last year. However, companies must also retain funds such as foreign currency working capital and will not convert all income into New Taiwan dollars.
As for whether manufacturers have delayed foreign exchange settlement due to the interest rate difference between Taiwan and the United States, Cai Jiongmin believes that the main influencing factor is "the expected psychology of manufacturers." He cited the violent appreciation of the New Taiwan dollar in May last year as an example. At that time, the interest rate differential between Taiwan and the United States was still higher than it is now.
Cai Jiongmin reminded that after the U.S. midterm elections, the market should reassess the possibility of the Fed raising interest rates and the trend of the U.S. dollar. Oil prices have fallen recently. If the trend continues, U.S. inflationary pressures may ease. If some states tighten regulations on AI, which will slow down AI investment and cool U.S. economic growth, it is worth watching whether the Fed's hawkish stance still needs to be that strong.
He said that manufacturers may hope that the U.S. dollar can be sold at a better price, but in the face of post-election changes in the situation, "all these should be re-evaluated" and it is not advisable to expect the U.S. dollar to continue to strengthen. If there is demand for New Taiwan dollars and there are US dollars in hand to settle and sell, you can diversify your entry at the right time.
Cai Jiongmin pointed out that in recent days, some exporters have seen an increase in selling foreign exchange. As the end of the year approaches, it is expected that there will be more demand for foreign exchange settlement. The central bank is worried that if the stock market rebounds in the future, foreign investment returns, and exporters concentrate on selling dollars, the two forces will overlap and may intensify exchange rate fluctuations.
"Most of the fluctuations are bad." Tsai Jiong-min emphasized that Taiwan's fundamentals and international balance of payments are performing well, but the value of the New Taiwan dollar should still be determined by the market. The central bank mainly focuses on whether market supply and demand are balanced, and adjusts and eases fluctuations in a timely manner.
