Govt to mobilize National Stabilization Fund to support local bourse

Taipei, Feb. 7, 2003 (CENS)--Vice Premier Lin Hsin-I said yesterday that the government will activate the National Stabilization Fund to support the local stock markets should share prices slide irrationally due to a war in Iraq.

Lin, who also leads a task force monitoring developments in the U.S.-Iraq situation, said the government will also use its foreign exchange reserves if necessary to ensure a stability in the local foreign exchange market.

Lin made the remarks at a meeting of the task force held yesterday to discuss the geopolitical situations in the Middle East and the impact of a possible war in Iraq on the local economy.

Members of the task force include Central Bank Governor Perng Fai-nan, Finance Minister Lin Chuan, Economics Minister Lin Yi-fu and Defense Minister Tang Yiao-ming.

The vice premier said that the government will ask the state-run Chinese Petroleum Corp. to absorb the increased crude oil prices if a U.S.-led war against Iraq is imminent and if the conflict is over in a short-term period.

The government will also persuade the privately owned Formosa Petrochemical Corp. to comply with the government's policy of not raising domestic oil prices if the U.S.-Iraq conflict takes place.

In addition, the Ministry of Finance will help local companies secure necessary financing and insurance to assure their normal operations, Lin said.

Meanwhile, Central Bank Governor Perng said that "the central bank is well prepared" to intervene in the foreign exchange market to "maintain the stability of the New Taiwan dollar."