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What is the Taiwan dollar (TWD)?

Credit Ratings & Outlook

Sovereign credit ratings play an important part in determining a country’s access to international capital markets, and the terms of that access. Sovereign ratings help to foster dramatic growth, stability, and efficiency of international and domestic markets.

Central Bank Rate

The current central bank interest rate is 1.88%. This is the same as 2011, which was 1.88%.

Unemployment

The latest unemployment rate for 2010 is 5.14%.

Political Structure

The current head of the government is Premier Sean Chen, and the head of state is President Ma Ying-jeou (in an executive role).

Currency Details

The New Taiwan Dollar, often denoted by TWD, is the official currency of the Republic of China (ROC), commonly referred to as Taiwan. The Qing Dynasty first annexed Taiwan in 1683 as an area of Fujian province. During this time, Chinese Taels were used as currency. When China ceded Taiwan to Japan in the Treaty of Shimonoseki of 1895, the Japanese issued Taiwan Yen banknotes at par with the Japanese yen. Proceeding Japan’s defeat in World War II, Taiwan was returned to China, which at that time was ruled by the government of the Republic of China. Within a year, the Republic of China’s government took over the Bank of Taiwan and issued Taiwanese Dollars, replacing the Japanese Taiwan Yen at a simple exchange rate of one to one. Due to the corruption of the Governor-General of Taiwan, Chen Yi, Taiwan suffered severe inflation in the late 1940s. It was also reported that the Bank of Taiwan under ROC administration did not actually keep accurate records of the total issuance, and that it printed more notes than was legally allowed. As inflation grew worse, the government issued banknotes with higher and higher denominations?up to one million dollars?in an attempt to solve this issue. The New Taiwan Dollar was introduced in 1949 to replace the old Taiwan Dollar at a 40,000-to-1 ratio. The first goal of the New Taiwan Dollar was to end the hyperinflation that had overwhelmed Taiwan and Mainland China. A few months later, the Chinese communists defeated the Republic of China’s government. In 2000, the New Taiwan Dollar became the official currency of the Republic of China and is no longer secondary to the older Taiwan Dollar. During the same time period, the Central Bank of China began issuing New Taiwan Dollar banknotes directly.

Moody’s Rating
Aa3, 20 Jul 1999
S&P Rating
AA+

Sovereign credit ratings play an important part in determining a country’s access to international capital markets, and the terms of that access. Sovereign ratings help to foster dramatic growth, stability, and efficiency of international and domestic markets.

What does it look like?

Political Structure

Taiwan’s official name is the Republic of China. A representative democracy has emerged from its former one-party state. The government is an informal coalition led by the Democratic Progressive Party (DPP), the largest party in the Legislative Yuan. The president nominates a premier to preside over the Executive Yuan (the cabinet), which has three arms: ministries and commissions, 19 subordinate administrative organs of state, and the Executive Yuan Council, which is the supreme policymaking body. The head of state in Taiwan is the President, who is elected for 4-year terms. The legislative body, more formally entitled the Legislative Yuan, has 225 seats. The number of seats, however, is planned to drop to 113 in 2008.

Prominent Figures

Chief of State President MA Ying-jeou (since 20 May 2008); Vice President Vincent SIEW (since 20 May 2008) Head of Government Premier (President of the Executive Yuan) WU Den-yih (since 10 September 2009); Vice Premier (Vice President of Executive Yuan) CHU Li-luan (Eric CHU) (since 10 September 2009) Cabinet Executive Yuan – (ministers appointed by president on recommendation of premier) Elections president and vice president elected on the same ticket by popular vote for four-year terms (eligible for a second term); election last held 22 March 2008 (next to be held in March 2012); premier appointed by the president; vice premiers appointed by the president on the recommendation of the premier Election Results MA Ying-jeou elected president; percent of vote – MA Ying-jeou 58.45%, Frank HSIEH 41.55%

Key Economic Factors

Consumer Price Index:

The CPI measures the change in prices of goods and services purchased for consumption by households. The CPI shows consumer price inflation by measuring the change in consumer’s prices. The largest part of Taiwan’s CPI is food, which makes up a fourth of the index.

Gross Domestic Product:

The GDP is one of the most important ways to gauge how the Taiwanese economy is doing. The GDP is a measure of the total production and consumption of goods and services in Taiwan. The changes in the values of GDP are used to determine business cycle peaks and troughs. When analyzing Taiwan’s GDP, focus should be drawn to total real GDP growth, change in household consumption, change in government expenditure, and change in the nation’s export levels.

Foreign Trade:

The difference between exports and imports of foreign trade in goods and services makes up the balance of trade. Trade structure is mainly weighed on capital-intensive and technology-intensive products and exports are heavily reliant on global-tech demand, especially electronics and electronic components. When analyzing Taiwan’s foreign trade, one should specifically focus on exports of electronic and electrical components, as Taiwan is extremely export dependent. Additionally, changes in trade balance with particular countries should be noticed.

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