Bloomberg News

Taiwan Dollar Weakens as Europe Debt Crisis Dims Growth Outlook

October 20, 2011

Oct. 20 (Bloomberg) -- Taiwan’s dollar slipped and government bonds rose on concern Europe’s lingering debt crisis will slow the global economy, damping demand for the island’s exports.

Overseas orders, an indication of shipments in the next one to three months, grew 2.72 percent last month from a year earlier, the slowest pace in two years, the government reported toward the end of currency trading. The median estimate of economists in a Bloomberg survey was for a 3.46 percent increase. Global funds sold $322.6 million more local stocks than they bought today, taking net sales for the year to $10.1 billion, according to exchange data.

“Sentiment is fragile, traders don’t dare take overnight positions as they’re still skeptical whether Europe will find a solution to solve the crisis,” said Frances Cheung, a Hong Kong-based strategist at Credit Agricole CIB. “There’re export numbers from other parts of Asia, like Singapore, showing shipments are already affected by the weaker economic outlook.”

Taiwan’s dollar closed 0.6 percent weaker at NT$30.269 against its U.S. counterpart, according to Taipei Forex Inc.

The yield on the 2 percent bonds due July 2016 fell one basis point, or 0.01 percentage point, to 1.045 percent, prices from Gretai Securities Market show.

Singapore’s non-oil domestic exports fell 4.5 percent in September from a year earlier, data showed this week. That compared with a 5.1 percent gain in August and a 3.5 percent rise forecast by economists in a Bloomberg survey.

Stocks indexes slipped across Asia today after a report of a split between France and Germany over the European bailout fund talks. The MSCI Asia-Pacific Index of regional stocks dropped 1.2 percent, while Taiwan’s benchmark equity index fell 1.5 percent.

The overnight money-market rate, which measures interbank funding availability, was little changed at 0.395 percent, according to a weighted average compiled by the Taiwan Interbank Money Center.

--Editors: Andrew Janes, Ven Ram

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

To contact the editor responsible for this story: James Regan at jregan19@bloomberg.net


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