TAIWAN CLAMPS NEW CONTROLS ON CURRENCY INFLOWS Taiwan's new controls on currency inflows, implemented today, are a desperate bid to stem a flood of speculative money prompted by the local currency surge against the U.S. Dollar, local and foreign bankers said. The central bank now has to clear remittances exceeding one mln U.S. Dlrs earned from exports, shipping and insurance and bank lending plus remittances of more than 10,000 dlrs from any other source. Petitioners have to show their remittances relate to genuine commercial transactions. Meanwhile, traders are no longer required to report all outward payments concerning invisible trade, including freight, insurance and royalties, to the central bank. But bankers said they believed the new controls would be ineffective since businessmen could split up remittances into smaller units or simply remit money through Taiwan's flourishing currency black market. The bankers said the controls, announced on March 6, are a panic reaction to U.S. Pressure, which has intensified over the past week, for a faster appreciation of the Taiwan dollar to slow the growth of Taiwan's exports to the U.S. The government has denied local press reports Washington is pressing for an exchange rate of up to 28 dlrs. The Taiwan dollar opened four cents up today at 34.70. "I don't think the central bank has a final target," said an executive with a U.S. Bank. Other bankers and economists said they are wary of making any firm predictions about how far the Taiwan dollar will rise. Taiwan's trade surplus with the U.S. Hit 13.6 billion U.S. Dlrs last year against 10.2 billion in 1985. The surplus widened in the first two months of the year to 2.35 billion dlrs from 1.87 billion in the same period last year. Economists estimate up to five billion dlrs in speculative money flowed into Taiwan in 1986. This inflow helped boost foreign exchange reserves to more than 51 billion dlrs from just under 25 billion this time last year and provided further upward pressure on the currency. The Taiwan dollar has appreciated by almost 15 pct against the U.S. Currency since September 1985, further encouraging speculators. Central bank governor Chang Chi-cheng said last week Washington's pressure plus rising foreign exchange reserves meant a further strengthening in the currency is inevitable. Many local bankers argue the only effective solution to the currency problem is to drop foreign exchange controls and allow the local dollar to find its own level. "Lifting exchange controls is the final answer, but the central bank is not prepared to do it. It simply does not want to take the risk," said one local banker. He said he believed the new restrictions are a temporary measure designed to buy time as the central bank grapples with the exchange rate problem. The restrictions are a bureaucratic imposition and skirt around the real issue, he said. Taiwan needs a fundamental restructuring of foreign exchange controls, said an executive with a western bank. "The controls will create more paperwork, but the extra bank charges will not outweigh the profits of speculation," said the manager of a European bank. Economists criticised the controls, saying they could antagonise Washington, which is pushing for further economic liberalisation in Taiwan. "Instead of liberalising outflows, the government has restricted inflows," said Kate Newman, an economist with Vickers da Costa. A local banker, who declined to be named, said, "It's basically ridiculous. It's a backward movement and goes against the government's liberalisation programme." Taiwan last year eased some of its financial regulations to enable Taiwan nationals to invest in foreign government bonds, treasury bills and certificates of deposit and to allow individuals to take 5,000 U.S. Dlrs in cash out of the country each year.