Taiwan is facing its highest inflation in years. The Taiwan dollar is also at its lowest level in years. Though the central bank is considering raising interest rates to calm the situation, many question how long Taiwanese households will feel the pinch.
With prices rising around the world and interest rates going up in the United States, Taiwan’s currency is taking a hit. And Taiwan’s central bank says the New Taiwan Dollar’s drop may not be done yet.
The Taiwan dollar’s last low-point was in 2019, before rising to a high of about NT$27 for every US dollar earlier this year. But the currency has fallen quickly since then, with the US dollar topping the NT$31 mark on Wednesday. That’s got some monetary hawks considering a drastic increase in interest rates.
Experts say the central bank should raise interest rates to prevent a further slip in the exchange rate. They say if the Taiwan dollar continues to weaken, it may complicate efforts to control inflation.
Government figures show that Taiwan’s average salary is now over US$1,400 per month. Wages increased by over 3% in the first seven months of this year alone. But because inflation is rising faster than wages, people’s ability to buy things is going down for the first time in six years.
Surveys have shown that most businesses are unable to raise wages. Coupled with the government’s decision not to raise public-sector wages next year, inflation may keep eating away at people’s pockets.
With the conditions in the global economy looking like they’re unlikely to improve soon, Taiwanese families may keep feeling the pinch.