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Strategies & Market Trends : 2026 TeoTwawKi ... 2032 Darkest Interregnum -- Ignore unavailable to you. Want to Upgrade?

To: Cogito Ergo Sum who wrote (73691)	4/30/2011 5:16:57 AM
From: elmatador	Read Replies (1) \| Respond to of 218789

demonstrates how measuring a currency’s strength or weakness against the US dollar makes decreasingly little sense how come Taiwan’s exports and its currency are both surging in tandem? Taiwan has not discovered any new fundamental laws. But it does export the right products for today’s global trade; and it also demonstrates how measuring a currency’s strength or weakness against the US dollar makes decreasingly little sense. Taiwan’s trade, currency defy gravity April 29, 2011 9:24 am by Robin Kwong 0 0 A strong currency hurts exporters – this is the stuff of economics 101. So how come Taiwan’s exports and its currency are both surging in tandem? Taiwan has not discovered any new fundamental laws. But it does export the right products for today’s global trade; and it also demonstrates how measuring a currency’s strength or weakness against the US dollar makes decreasingly little sense. In March, Taiwan’s exports rose 16.7 per cent from a year ago to a record $27.25bn, after rising 27.3 per cent in February. This month, the New Taiwan Dollar broke through T$29 per US dollar to reach a 13-year high. The continued strength of the island’s exporters makes all the hand-wringing earlier over whether or not the Taiwan dollar would breach T$30 per USD seem a little quaint in retrospect. The fact that Korean exporters are also doing well raises doubts, too, about whether investors and analysts were too hasty several months ago in declaring the ‘export trade’ over. Healthy growth in Taiwanese exports is likely to continue for at least several months, judging from forward-looking data: new export orders received in March were a record US$39bn, or 13.4 per cent more than a year ago. There are reasons for the apparent contradiction. The first is that the Taiwan dollar’s value relative to the US dollar is no longer the right place to look. It is still used as the default cross-rate because the US once accounted for more than half of Taiwan’s total export market. Now, however, it accounts for little more than 10 per cent. Cheng Cheng-mount, economist at Citi, explains that intra-Asian trade is becoming more important for Taiwan, and “the Taiwan dollar’s value has been relatively stable” relative to the currencies of its main export competitors, notably the South Korean won (see chart). Taiwan’s exports are also mainly in petrochemicals and electronic products “which are not so price sensitive,” Mr Cheng said. China is now Taiwan’s biggest export market. True, the Taiwan dollar has also risen relative to the renminbi, but that impact is mitigated partly because it comes at a time when the Chinese currency is also strengthening. Another mitigating factor is that many Taiwanese companies now have manufacturing facilities in China, so the impact of currency movements becomes less marked. A far more important worry for Taiwanese exporters would be any prospects of a slowdown in the Chinese economy. To that end, the latest China PMI figure of 51.8 from HSBC should reassure. Qu Hongbin, co-head of Asian economics research said: “The final results of April manufacturing PMI confirmed that picture of steady growth and sustained inflationary pressures in manufacturing sector. Concerns about sharp slowdown are unwarranted.” blogs.ft.com