Bloomberg News

Taiwan Dollar Reaches Two-Week Low, Bonds Gain on Europe Woes

December 15, 2011

Dec. 15 (Bloomberg) -- Taiwan’s dollar dropped to a two- week low on concern that Europe’s debt crisis will hurt regional exports, sapping demand for emerging-market assets. Bonds rose.

The MSCI Asia-Pacific Index of regional shares lost 1.2 percent after Japan’s Tankan index of large manufacturers’ sentiment fell more than economists forecast and sales at major South Korean department stores contracted for the first time since February 2009. Fitch Ratings downgraded five European lenders yesterday, including Credit Agricole, France’s second- biggest bank by assets.

“We’re seeing weaker Asian currencies as global market sentiment is in risk-off mode,” said Teck Kin Suan, an economist at United Overseas Bank Ltd. in Singapore. “Export- driven currencies such as the Korean won and the Taiwan dollar will continue to weaken into the first quarter of next year.”

The Taiwan dollar fell 0.1 percent to NT$30.328 against its U.S. counterpart as of 9:50 a.m. local time, according to Taipei Forex Inc. The currency touched NT$30.340, the weakest level since Dec. 1. The island’s benchmark Taiex stock index dropped 1.6 percent, the biggest loss in more than a week.

Government bonds rose. The yield on the 1.25 percent bonds due September 2021 fell two basis points, or 0.02 percentage point, to 1.245 percent, prices from Gretai Securities Market show.

Taiwan’s legislature approved a plan to issue up to NT$610 billion ($20.1 billion) of government bonds with maturities of more than one year, Tang Ming-hui, deputy director-general at the Ministry of Finance’s National Treasury Agency, said yesterday.

“Bond issues next year can’t exceed the budgeted amount approved but we haven’t decided on the exact 2012 bond plan,” Tang said.

The government has sold NT$585 billion of bonds so far this year, compared with a 2011 plan to sell NT$620 billion, he said. It is scheduled to auction NT$35 billion of 10-year bonds on Dec. 26, the finance ministry said earlier.

--Editors: Andrew Janes, Ven Ram

To contact the reporter on this story: Kyoungwha Kim in Singapore at kkim19@bloomberg.net

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


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