Bloomberg News

Taiwan Dollar Rises Most in Six Weeks After Central Banks Act

December 01, 2011

Dec. 1 (Bloomberg) -- Taiwan’s dollar strengthened the most in six weeks as regional stocks jumped after central banks took steps to boost economic growth. Government bonds fell.

The local dollar rose for a fourth day as foreign funds bought $547 million more of the island’s stocks than they sold today, according to exchange data. China lowered reserve requirements for banks yesterday for the first time since 2008. Six central banks led by the Federal Reserve yesterday made it cheaper for lenders to borrow dollars in emergencies in a global effort to ease Europe’s sovereign-debt crisis.

“It was a huge sentiment boost last night when central banks around the world acted to stop things getting worse,” said Henry Lin, a Taipei-based foreign-exchange trader at Taiwan Shin Kong Commercial Bank. “But I’m not sure if it’ll have more effect than just a few days of gains in markets.”

The Taiwan dollar strengthened 0.7 percent to NT$30.146 against its U.S. counterpart, according to Taipei Forex Inc. It reached NT$30.060 earlier, the strongest level since Nov. 9.

The People’s Bank of China cut the amount of cash banks must set aside as reserves to 21 percent from a record 21.5 percent effective Dec. 5. The MSCI Asia-Pacific Index of stocks jumped 3 percent, the most since Oct. 27.

The yield on the 1.25 percent bonds due September 2021 rose one basis point, or 0.01 percentage point, to 1.324 percent, prices from Gretai Securities Market show. The central bank is scheduled to review borrowing costs on Dec. 29.

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.

--Editors: Andrew Janes, Simon Harvey

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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