{"version":1,"tree":{"n":"html","c":[{"n":"head","x":"\n ","l":"\n ","c":[{"n":"title","x":"Desconocido","l":"\n \n "},{"n":"link","l":"\n","a":[["rel","stylesheet"],["type","text/css"],["href","../../stylesheet.css"]]},{"n":"link","l":"\n","a":[["rel","stylesheet"],["type","text/css"],["href","../../page_styles.css"]]}]},{"n":"body","a":[["class","calibre"]],"c":[{"n":"div","x":"| ","a":[["class","calibre_navbar"]],"c":[{"n":"a","x":"Siguiente","l":" | ","a":[["href","javascript:void(0)"],["rel","articlenextlink"],["data-xQvX3JSyyUS4yAvbblzwf5","{\"name\": \"feed_13/article_3/index_u54.html\", \"frag\": \"\"}"]]},{"n":"a","x":"Menú de sección","l":" | ","a":[["href","javascript:void(0)"],["data-xQvX3JSyyUS4yAvbblzwf5","{\"name\": \"feed_13/index_u32.html\", \"frag\": \"article_2\"}"]]},{"n":"a","x":"Menú principal","l":" | ","a":[["href","javascript:void(0)"],["data-xQvX3JSyyUS4yAvbblzwf5","{\"name\": \"index_u63.html\", \"frag\": \"feed_13\"}"]]},{"n":"a","x":"Anterior","l":" | ","a":[["href","javascript:void(0)"],["rel","articleprevlink"],["data-xQvX3JSyyUS4yAvbblzwf5","{\"name\": \"feed_13/article_1/index_u83.html\", \"frag\": \"\"}"]]},{"n":"hr","l":"\n","a":[["class","calibre6"]]}]},{"n":"div","a":[["class","calibre-nuked-tag-article"]],"c":[{"n":"div","x":"Taiwan straits","a":[["class","calibre8"]]},{"n":"h1","x":"Trump is a threat to Asia’s giant insurers ","a":[["class","calibre9"]]},{"n":"div","x":"Not just its exporters","a":[["class","calibre19"]]},{"n":"p","x":"may. 08, 2025 01:49 | Hong Kong and Singapore","a":[["class","calibre10"]]},{"n":"div","a":[["class","calibre-nuked-tag-article"]],"c":[{"n":"img","a":[["src","images/img1_u55.jpg"],["title","A woman cycles past a painting of a shark on a street in Taipei "],["class","calibre3"],["data-calibre-src","feed_13/article_2/images/img1_u55.jpg"]]}]},{"n":"div","a":[["class","calibre11"]]},{"n":"p","a":[["class","calibre12"]],"c":[{"n":"span","x":"S","a":[["data-caps","initial"],["class","calibre13"]]},{"n":"span","x":"OME COUNTRIES","l":" are rich. Others are cheap. And then there is Taiwan. The miracle economy, home to the world’s most advanced chipmaker, has a respectable ","a":[["class","calibre14"]]},{"n":"span","x":"GDP ","l":"per person of over $33,000. Yet the prices of its goods and services are only 42% of America’s, when converted into dollars. Its McDonald’s burgers, to take one example, are the cheapest of all the countries tracked by our Big Mac Index.","a":[["class","calibre14"]]}]},{"n":"p","x":"That is one sign the island’s currency, the Taiwanese dollar, is out of whack. If its exchange rate were stronger, burgers and everything else would be more expensive in dollar terms. Another sign Taiwan’s currency is cheap is the country’s current-account surplus, which is equivalent to more than 14% of ","a":[["class","calibre12"]],"c":[{"n":"span","x":"GDP","l":", or “ungodly big” in the words of Brad Setser of the Council on Foreign Relations, a think-tank. Taiwan’s exports of integrated circuits have more than doubled over the past decade. Yet the exchange rate of the Taiwanese dollar has remained remarkably stable. It was around NT$31 to the American dollar at the end of April 2015. And it was around NT$32 at the end of last month.","a":[["class","calibre14"]]}]},{"n":"div","a":[["class","calibre-nuked-tag-article"]],"c":[{"n":"img","a":[["src","images/img2_u10.png"],["title",""],["class","calibre3"],["data-calibre-src","feed_13/article_2/images/img2_u10.png"]]}]},{"n":"div","a":[["class","calibre11"]]},{"n":"p","x":"Then, at the start of May, something unusual happened. Taiwan’s currency became abruptly less cheap. It strengthened by as much as 5% during trading on May 5th, adding to a big gain on the previous trading day (see chart). These were the largest moves in the sleepy currency since the 1980s.","a":[["class","calibre12"]]},{"n":"p","x":"Anyone who had earlier this year predicted a big lurch in the Taiwanese dollar would probably have expected it to weaken. America’s new president was threatening a trade war against China and other commercial partners that would lift the dollar and harm Asia’s exporters, contributing to falls in their currencies. Instead, it is America’s currency that has dropped.","a":[["class","calibre12"]]},{"n":"p","x":"For Asia, that has created a dilemma of a different kind. Taiwan’s exporters have accumulated a large stash of dollar earnings. About 16% of deposits held in the country’s onshore banks are in foreign currency, one of the highest shares on the continent. As America’s dollar has declined, some of these exporters may have decided that now would be a sensible time to convert their earnings into local currency, before they lose any more of their value, which might have triggered the upward movement in Taiwan’s currency.","a":[["class","calibre12"]]},{"n":"p","x":"What then amplified it was probably the anxieties of Taiwan’s life insurers. Their purchases have helped offset the inflow of dollars from the country’s exporters, keeping the currency competitive. But their holdings have","a":[["class","calibre12"]],"c":[{"n":"b","x":" ","l":"created a currency mismatch: the lifers pay out policies in Taiwanese dollars, and own assets denominated primarily in American dollars.","a":[["class","calibre13"]]}]},{"n":"p","x":"Recent currency moves may have prompted them to rush to hedge their exposure. They might have agreed to sell American dollars for Taiwanese dollars on a future date, at a rate decided today. This sudden demand for Taiwanese currency in the future would also have raised its value today, as the institutions on the other side of the trade buy Taiwanese dollars now for delivery when the transaction matures.","a":[["class","calibre12"]]},{"n":"p","x":"Taiwan’s central bank does not usually allow large daily moves in the exchange rate without stepping in. The fact that it did not intervene on May 2nd no doubt contributed to the large moves on May 5th. Many investors began to wonder if the central bank was trying to keep a low profile as the country conducts trade talks with America. Taiwan","a":[["class","calibre12"]],"c":[{"n":"b","x":" ","l":"is one of the countries America’s Treasury department is monitoring for currency manipulation.","a":[["class","calibre13"]]}]},{"n":"p","x":"But the big moves on May 5th forced the central bank’s hand. At an emergency press conference, Yang Chin-long, the governor, said the bank had intervened in response to an “abnormal situation”. Since then, the currency has weakened a little.","a":[["class","calibre12"]]},{"n":"p","x":"In principle, the central bank can create as many Taiwanese dollars as people want to buy. But by always stabilising the currency, it gives the country’s life insurers less incentive to hedge their exposures, ensuring that the mismatch on their balance-sheets persists. And although Mr Yang insisted that Taiwan’s currency was not a part of the country’s trade talks, he will not want to take chances. The central bank is “well aware that there are people in this administration who are very focused on the currency issue”, points out Mr Setser.","a":[["class","calibre12"]]},{"n":"p","x":"Mr Setser himself co-authored a study in 2019 looking into the ways the central bank has guided the currency indirectly, making it easier for life insurers to buy dollar assets so it would not have to. It “did not exactly appreciate the scrutiny”, he says.","a":[["class","calibre12"]]},{"n":"p","x":"Nor is the bank a fan of our ","a":[["class","calibre12"]],"c":[{"n":"a","x":"Big Mac index","l":": in 2016 it felt obliged to issue a press release pointing out that the burger measurement was “lighthearted”. Yet its policymakers have a problem. Although they can stop the Taiwanese dollar from becoming more expensive, they cannot stop it becoming more conspicuous—especially if the American dollar keeps falling. ","a":[["href","https://www.economist.com/interactive/big-mac-index"]]},{"n":"span","x":"■"}]},{"n":"p","a":[["class","calibre12"]],"c":[{"n":"i","x":"For more expert analysis of the biggest stories in economics, finance and markets, sign up to ","a":[["class","calibre18"]],"c":[{"n":"a","x":"Money Talks","l":", our weekly subscriber-only newsletter.","a":[["href","https://www.economist.com/newsletters/money-talks"],["target","_blank"]]}]}]}]},{"n":"div","x":"\n","a":[["class","calibre_navbar"]],"c":[{"n":"hr","l":"\n","a":[["class","calibre6"]]},{"n":"p","x":"This article was downloaded by ","l":"\n","a":[["class","calibre16"]],"c":[{"n":"strong","x":"calibre","l":" from ","a":[["class","calibre13"]]},{"n":"a","x":"https://www.economist.com/finance-and-economics/2025/05/08/trump-is-a-threat-to-asias-giant-insurers","a":[["href","https://www.economist.com/finance-and-economics/2025/05/08/trump-is-a-threat-to-asias-giant-insurers"],["rel","calibre-downloaded-from"]]}]},{"n":"br","a":[["class","calibre-nuked-tag-article"]]},{"n":"br","l":" | ","a":[["class","calibre-nuked-tag-article"]]},{"n":"a","x":"Menú de sección","l":" | ","a":[["href","javascript:void(0)"],["data-xQvX3JSyyUS4yAvbblzwf5","{\"name\": \"feed_13/index_u32.html\", \"frag\": \"article_2\"}"]]},{"n":"a","x":"Menú principal","l":" | ","a":[["href","javascript:void(0)"],["data-xQvX3JSyyUS4yAvbblzwf5","{\"name\": \"index_u63.html\", \"frag\": \"feed_13\"}"]]}]}]}]},"ns_map":["http://www.w3.org/1999/xhtml"]}