The local currency is likely to strengthen against the US dollar, although the struggling Japanese yen weighed down on the local currency last week, analysts say. JP Morgan Chase Manhattan, an American investment bank, believes the NT dollar should strengthen on signs of recovery in the economy in the second half of the year. Unlike during boom times, buyers of Taiwanese goods abroad are not likely to order more just because the goods are rendered slightly cheaper by a depreciation. Taiwan imports most of its raw material and components.
Conventional wisdom is challenged on the interest rate front as well.
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