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Central Bank Restricted by the U.S. Struggles to Tackle Currency Fluctuations

Central Bank Restricted by the U.S. Struggles to Tackle Currency Fluctuations

The currency war between Taiwan and the U.S. has raised concerns among citizens. Recently, the New Taiwan Dollar has surged dramatically, with volatile exchange rates alarming the public regarding economic impacts, yet Central Bank Governor Yang Chin-long has been vague in his responses. He hinted at the existence of 'vultures' engaging in currency speculation, drawing skepticism about whether he is shifting focus.

Former legislator Tsai Cheng-yuan pointed out on the 'Lin Chia-yuan Hot Evening News' program that boosting foreign currency is relatively easy, while raising the domestic currency is much more difficult. 'Our Central Bank can print New Taiwan Dollars, so it can manage supply, but the vultures know you’re tied down by the U.S.' He further illustrated that financial transactions, not trade balances, primarily influence exchange rates.

Tsai also highlighted that although the Central Bank possesses 'shotguns', lifting the dollar's value is straightforward, as raising the New Taiwan Dollar requires purchasing dollars, complicating operations. He mentioned that the Hong Kong Monetary Authority has been buying a lot of dollars to prevent a dramatic drop, while Taiwan's Central Bank faces challenges in competing for resources.