Nov. 4 (Bloomberg) -- Taiwan’s dollar strengthened, snapping a four-day decline, as Greece’s move to scrap a referendum and the European Central Bank’s unexpected cut in interest rates bolstered demand for emerging-market assets.
The gain limited this week’s loss to 0.5 percent. The central bank intervened in the currency market to ensure stability, said Teck Kin Suan, an economist at United Overseas Bank Ltd. Central bank Governor Perng Fai-nan pledged to “maintain order” in the exchange rate, in response to questions from lawmakers in parliament on Nov. 2.
“The central bank is always there in the market,” Singapore-based Suan said. “I expect some strengthening of the Taiwan dollar, together with other Asian currencies, as the uncertainty over the Greek situation lessened. In terms of investment, Asia including Taiwan is still attractive.”
The Taiwan dollar appreciated 0.7 percent to NT$30.025 against its U.S. counterpart, according to Taipei Forex Inc.
ECB officials unanimously agreed to lower the benchmark interest rate by 25 basis points to 1.25 percent yesterday, a move predicted by four of 55 economists surveyed by Bloomberg News. Greek Finance Minister Evangelos Venizelos said yesterday the country won’t hold a referendum on a bailout package agreed last week with euro region leaders. The vote prompted the European Union to halt aid, pushing Greece toward a default.
The yield on the 1.25 percent government bond due September 2021 rose one basis point to 1.33 percent, prices from Gretai Securities Market show. That pared its weekly decline to five basis points, or 0.05 percentage point.
Taiwan sold NT$100 billion ($3.3 billion) of 364-day certificates of deposit at an average interest rate of 0.96 percent at an auction today.
The sale attracted bids for 3.35 times the amount on offer, the Central Bank of the Republic of China (Taiwan) said. The monetary authority last sold similar-maturity certificates on Oct. 7 at 0.984 percent. That offer garnered a bid-to-cover ratio of 2.53 times.
--Editors: Sandy Hendry, Andrew Janes
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