Oct. 31 (Bloomberg) -- Taiwan’s dollar snapped a five-day rally after Japan intervened to weaken the yen, spurring speculation other Asian countries may follow suit to protect their exports.
Taiwan’s government reported this afternoon that gross domestic product expanded 3.37 percent in the third quarter from a year earlier, the slowest pace in two years. It also cut its 2012 growth forecast to 4.38 percent from 4.58 percent. The Taiwan dollar reversed early gains after Finance Minister Jun Azumi said Japan had stepped into bring the yen down from a postwar high.
“After the spike in the yen, traders are worried that other Asian central banks will follow their Japanese counterparts to protect their exports,” said Henry Lin, a Taipei-based foreign-exchange trader at Taiwan Shin Kong Commercial Bank. “Gains in the Taiwan dollar will be limited as a result.”
Taiwan’s dollar retreated 0.2 percent to NT$29.930 against its U.S. counterpart, according to Taipei Forex Inc. The currency advanced 0.5 percent to NT$29.730 earlier, the strongest level since Sept. 19. This month’s 1.9 percent gain follows a 4.9 percent slide in September.
The yield on the government’s 1.25 percent bonds due September 2021, the most-traded government securities, was little changed at 1.372 percent, prices from Gretai Securities Market show. The rate rose 10 basis points, or 0.10 percentage point, this month.
The overnight money-market rate, which measures interbank funding availability, was steady at 0.398 percent, according to a weighted average compiled by the Taiwan Interbank Money Center. It was little changed this month.
--Editors: Andrew Janes, Sandy Hendry
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