Bloomberg News

Taiwan Dollar Weakens, Bonds Rise on Global Slowdown Concerns

November 23, 2011

Nov. 23 (Bloomberg) -- Taiwan’s dollar fell to a six-week low and government bonds rose on concern a global economic slowdown will hurt exports and sap demand for emerging-market assets.

Overseas investors cut their holdings of the island’s stocks for a sixth day, selling NT$10.6 billion ($349 million) more than they bought, exchange data show. Taiwan’s industrial production rose 1.4 percent in October from a year earlier, the slowest growth in more than two years, the government reported toward the close of local currency trading today. The yield on the government’s 10-year bonds dropped six basis points in November as the Taiex Index of shares slumped 10 percent.

“You can tell from the stock markets that investor confidence is at a pretty low level,” said Albert Lee, a Taipei-based fixed-income trader at Cathay United Bank Co. “Yields will edge even lower if trading volumes pick up.”

The Taiwan dollar slipped 0.3 percent to NT$30.395 against its U.S. counterpart, retreating for a fourth day, according to Taipei Forex Inc. It touched NT$30.418, the weakest level since Oct. 12.

The yield on the 1.25 percent government bonds due September 2021, the most-traded government securities, fell to 1.314 percent from 1.319 percent, prices from Gretai Securities Market show. That’s the lowest level since Oct. 20. The Taiex slumped 2.8 percent to its worst close since August 2009.

The overnight money-market rate, which measures interbank funding availability, was little changed at 0.4 percent, according to a weighted average compiled by the Taiwan Interbank Money Center.

U.S. gross domestic product rose at a 2 percent annual rate in the third quarter, the Commerce Department reported yesterday. That’s less than a previous estimate of 2.5 percent. China’s manufacturing may contract this month by the most since March 2009, according to a preliminary purchasing managers’ index published today by HSBC Holdings Plc and Markit Economics.

The U.S. and China are the world’s largest economies and the biggest buyers of Taiwan’s exports.

--Editors: James Regan, 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: Sandy Hendry at shendry@bloomberg.net


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