Taiwan's Central Bank Governor warns of currency risk for seven countries

台灣央行總裁警告七個國家貨幣風險

The seven countries at risk of a currency crisis named by Yang are Sri Lanka, South Africa, Argentina, Pakistan, Egypt, Turkey, and Ukraine.


TAIPEI (Taiwan News) - Taiwan's Central Bank Governor, Yang Chin-long (楊金龍), said in the bank's latest report that seven emerging economies are facing the prospect of a potential currency crisis, while Taiwan's currency will remain stable on the back of persistent current account surplus, healthy balance of payments, and sufficient Forex reserves, along with its low level of external debt.

The seven countries at risk of a currency crisis named by Yang are Sri Lanka, South Africa, Argentina, Pakistan, Egypt, Turkey, and Ukraine.

Yang is also scheduled to report to the Finance Committee of the Legislative Yuan on Wednesday, October 3.

Under the influence of a higher U.S. interest rate and stronger U.S. dollar, the named emerging economies with weak fiscal health have become more vulnerable to changes in capital markets, and underwent significant exchange rate depreciation since April, of which the Argentine peso and Turkish lira crashed 50 percent and 35 percent respectively as of September 28.

Nomura Holdings' September analysis is cited in the central bank's latest report as saying Sri Lanka, South Africa, Argentina, Pakistan, Egypt, Turkey, and Ukraine are at risk of an exchange-rate crisis.

The report also singles out the currencies of India, Indonesia, and the Philippines, which have fallen 12 percent, 9 percent, and 7.6 percent respectively against the U.S. dollar so far this year.

Yang expressed his confidence in New Taiwan Dollar (NTD) thanks to the country's persistent large current account surplus from 2008, healthy balance of payments, significant amount of Forex reserves of around US$459.9 billion, and its low level of external debt of US$0.1 billion.

Yang added that Taiwan and South Korea are less at risk, and the NTD outperforms South Korean won in terms of currency stability.

In a quarterly meeting last week, Yang pointed out that the world economy is facing the prospect of four major risks, including U.S. trade policy uncertainty, deteriorating financial situation in emerging markets, downward pressure on China's economy, and growing geopolitical risks.