Feb. 1 (Bloomberg) -- Taiwan’s dollar reversed earlier gains on concern economic growth will falter after the island reported the slowest expansion in two years. Bonds gained.
Taiwan’s gross domestic product increased 1.9 percent in the fourth quarter from a year earlier, the slowest pace in more than two years, and contracted from the previous three months, the statistics bureau reported yesterday. The local dollar also weakened after the greenback’s 14-day relative-strength index dropped to 20 yesterday, below the threshold of 30 that signals the U.S. currency may rebound. The Taiwan dollar appreciated 2.3 percent in January, the most in nine months.
“Economic growth prospects are still very uncertain,” said Tarsicio Tong, a currency trader at Union Bank of Taiwan in Taipei. “The central bank is aware of the recent rallies of the currency.”
The Taiwan dollar weakened 0.3 percent to NT$29.695 against its U.S. counterpart as of the close, according to Taipei Forex Inc. That’s the biggest decline since Dec. 15. The currency touched NT$29.500 earlier, the strongest level since Sept. 14.
The government sold NT$30 billion ($1 billion) of two-year bonds at 0.78 percent today, compared with the median estimate of 0.8 percent in a Bloomberg News survey.
The yield on the government’s 1 percent notes due January 2017 dropped one basis point, or 0.01 percentage point, to 0.929 percent, prices from Gretai Securities Market show.
The overnight money-market rate, which measures interbank funding availability, fell one basis point to 0.396 percent, according to a weighted average compiled by the Taiwan Interbank Money Center.
--Editors: Andrew Janes, Simon Harvey
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