Premier Yu Kuo-Hua ordered financialofficials to quicken the pace of relaxing foreign exchange
controls and study the possibility of suspending the controls,
a cabinet statement said.
    The statement quoted Yu as telling Finance Ministy and
Central Bank officials the relaxation was needed to help reduce
Taiwan's surging foreign exchange reserves, which reached a
record 53 billion U.S. Dollars this month.
    Finance Minister Robert Chien told reporters his ministry
and the Central Bank would work jointly on new measures to ease
the controls, but he did not give details.
    Yu said the government could maintain the framework of the
foreign exchange controls while finding ways to ease them. The
controls would be used during emergency.
    Taiwan's reserves have resulted largely from its trade
surplus, which hit 15.6 billion dlrs in 1986 and 10.6 billion
in 1985. About 95 pct of the surplus was from Taiwan's trade
with the United States, according to official figures.
    But he said that while easing the controls would help
reduce the reserves, it would not do so substantially in a
short time.
    Economists and bankers said the new decision resulted from
growing pressure from the United States, Taiwan's largest
trading partner, which buys almost half the island's exports.
    Lu Ming-Jen, economic professor at Soochow University, told
Reuters: "The decision came a little bit late. But it was better
than never."
    Ko Fei-Lo, Vice President at First Commercial Bank, said
the government should rapidly relax its foreign exchange
controls and open its market wider to help balance trade with
its trading partners, especially the United States.
    "The liberalisation in both imports and foreign exchange
controls will not only help our trading partners, but also help
our own economic problems," he said.
    He said the mounting foreign exchange reserveshelped boost
Taiwan's money supply by 48.22 pct in the year to end-February.
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