Taiwan c.bank plans to limit overseas loan shipments for businesses
TAIPEI, Feb. 3 (Reuters) – Taiwan’s central bank on Wednesday said it plans to impose restrictions on remittances from foreign loans taken out by companies, as it seeks to crack down on opportunities for speculation on the Taiwanese dollar which appreciates rapidly.
Sources told Reuters last month that the central bank sent inspectors to domestic banks to check whether exporters were speculating in foreign currencies using foreign loans as the Taiwan dollar soars against the US dollar.
The central bank said it was still considering what those restrictions might be in terms of real numbers and had not given a timeline for the new rules to apply.
The 5.6% gain of the Taiwan dollar against the US dollar last year made it one of the strongest currencies in Asia. It has gained about 2% against the US dollar this year and is currently at a high of 23 and a half years against the US unit.
The central bank said last month that companies should not use foreign loans to engage in forex speculation.
Even though exports in 2020 hit a record high in value terms, the strength of the currency has upset the government as it risks making its manufacturing economy’s shipments less competitive.
At the same time, the authorities fear to intervene too heavily in the foreign exchange market and to be labeled a currency manipulator by the United States, the largest donor to the island claimed by China.
In December, the U.S. Treasury added Taiwan to a “watch list” of countries with concerns about monetary practices, the first time the island had been on the list since 2017. (Liang-sa Loh and Yimou report Lee; written by Ben Blanchard edited by Robert Birsel)