Bloomberg News

Taiwan Dollar Weakens, Bonds Rally on Europe’s Debt Crisis

October 04, 2011

Oct. 4 (Bloomberg) -- Taiwan’s dollar sank to a 10-month low and government bonds rallied for a third day as European finance chiefs failed to resolve differences over how best to contain a regional debt crisis.

Benchmark stock indexes slumped across Asia and the U.S. dollar strengthened versus 15 of 16 major global currencies after German Finance Minister Wolfgang Schaeuble opposed moves to increase the scale of the euro rescue fund, damping speculation of a breakthrough in Luxembourg talks to quell the crisis. Global inflationary pressure is easing as the world economic recovery slows, Taiwan’s central bank said in a report released yesterday.

“Europe continues to be the concern of the market,” said Eric Hsing, a fixed-income trader at First Securities Inc. in Taipei. “Bond yields will remain range-bound for the time being as investors generally think the central bank will keep interest rates unchanged.”

Taiwan’s dollar retreated 0.3 percent to NT$30.680 against its U.S. counterpart as of the 4 p.m. local close, according to Taipei Forex Inc. It touched NT$30.722 earlier, the weakest level since Dec. 6, 2010.

The yield on the 1.25 percent notes due September 2021, the most-traded government securities, fell to 1.260 percent from 1.264 percent yesterday, prices from Gretai Securities Market show. That was the lowest level for benchmark 10-year rates in a week. A basis point is 0.01 percentage point.

The overnight money-market rate, which measures interbank funding availability, was little changed at 0.397 percent, according to a weighted average compiled by the Taiwan Interbank Money Center.

--Editors: James Regan, Ven Ram

To contact the reporter on this story: Andrea Wong in Hong Kong at awong268@bloomberg.net

To contact the editor responsible for this story: Sandy Hendry at shendry@bloomberg.net


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