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Chinese yuan's depreciation draws mixed reactions in Taiwan
Central News Agency
2014-03-12 10:35 PM
Taipei, March 12 (CNA) With the Chinese yuan falling to its lowest level this year of 6.1343 against the U.S. dollar, economists and trust fund managers in Taiwan have expressed varied opinions about the expected effects of the Chinese currency's devaluation. Thomas Yeh, former deputy minister of economic planning and development, said Wednesday that it presents an opportunity for investors to buy the yuan. Anticipating that the depreciation would not last long, Yeh, who is now an advisor to the Chinese National Association of Industry and Commerce, said it is the right time to buy as the currency is cheap. Expressing a similar view, Yuanta China Balance Fund manager Yen Shih-lung said the yuan's depreciation is a short-term glitch and an opportunity for investors to increase their yuan holdings. The yuan dropped 1.4 percent in February, mainly as result of the People's Bank of China's plans to liberalize the currency, Yen said, forecasting that the yuan will return to a rising trend in the long term. He said China can be expected to maintain an economic growth rate of over 7 percent and that other countries, including the United States, will not stop pushing for the yuan's appreciation. However, Gordon Sun, director of the Macroeconomic Forecasting Center under the Taiwan Institute of Economic Research, warned that investment in the yuan is no longer a guarantee of profit because once China liberalizes the currency, it will be subject to market fluctuations. He urged Taiwanese investors to exercise caution as the risks are likely to escalate. Regarding the high yuan deposits recorded among Taiwanese over the past year, Zhou Xiaochuan, governor of the People's Bank of China, advised that investors "properly control the pace" of buying the currency. In similar vein, Masterlink Securities Investment Advisory Corp. president Liu Kun-hsi said the yuan is unlikely to gain enough momentum to appreciate this year. Individual and corporate investors should be careful about investing in the Chinese currency, he said. Earlier in the day, Tseng Ming-chung, chairman of Taiwan's Financial Supervisory Commission, said accumulated yuan deposits in Taiwan had reached 214.5 billion yuan (US$34.92 billion) as of January. (By Milly Lin, Chang Chien-chung, Lin Hui-chun, Esme Jiang and Elizabeth Hsu)
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