Taiwan’s central bank is likely to take a wait-and-see attitude towards the global currency war. That’s the word from National Chengchi University banking professor Chu Hau-min.
Falling oil prices and concerns over deflation, has led the eurozone, South Korea, Singapore and India to either lower their interest rates or introduce a Quantitative Easing (QE) program to stimulate their economy.
Lowering interest rates leads to currency depreciation. In mid-January, the Taiwan dollar rose sharply against the US dollar after the European Central Bank (ECB) unveiled its QE program.
Chu said that in light of the QE policies adopted by the global community, Taiwan’s central bank may choose to not follow in the footsteps of Washington to immediately raise interest rates as it has in the past.
“It’s possible that the central bank will not immediately raise interest rates right after the United States raises its own interest rates in the second half of this year. The central bank might leave the interest rate as is, and observe the currency policies of the United States and other countries,” said Chu.