Bloomberg News

Taiwan Dollar Falls to 2-Week Low, Bonds Gain on Growth Concern

July 09, 2012

Taiwan’s dollar touched the lowest level in almost two weeks and government bonds gained on concern China, the island’s biggest trading partner, is struggling to revive its economy.

Chinese Premier Wen Jiabao said downward pressure on the economy is still “relatively large” and the government will intensify fine-tuning of policies, according to a report from state-run Xinhua News Agency yesterday. U.S. employers added fewer workers to payrolls than forecast last month, data showed on July 6. Taiwan’s exports fell 3.2 percent last June from a year earlier, a fourth consecutive month of declines, official data showed today.

“Concern over growth in China and the U.S. is looming over the markets,” said Eric Hsing, a fixed-income trader at First Securities Inc. in Taipei. “There won’t be too much room for yields to go down much further unless the central bank cuts interest rates in September.”

The Taiwan dollar fell 0.2 percent to NT$29.975 against its U.S. counterpart, according to Taipei Forex Inc. It touched NT$30.010 earlier, the weakest level since June 26. One-month implied volatility, a measure of exchange-rate swings used to price options, held at 3.80 percent.

Taiwan’s central bank, which left borrowing costs unchanged at 1.875 percent last month, will next review its benchmark interest rate in September.

Consumer prices in China rose 2.2 percent in June from a year earlier, the least since January 2010, according to official data released today.

The yield on the 1.25 percent bonds due March 2022 dropped one basis point, or 0.01 percentage point, to 1.21 percent, according to Gretai Securities Market. That’s the lowest level since June 26. The overnight interbank lending rate was steady at 0.507 percent, according to a weighted average compiled by the Taiwan Interbank Money Centre.

To contact the reporter on this story: Andrea Wong in Taipei at

To contact the editor responsible for this story: Sandy Hendry at

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