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Key rate likely to be cut
The central bank will probably lower its benchmark interest rate to a record at a policy meeting due to begin at 3pm today, after an expected rate cut in the US yesterday, economists said.

The central bank will probably trim its key rediscount rate to as low as 1.375 percent from 1.625 percent, they said.

The bank has cut its key lending rate 14 times since December 2000, most recently on Nov. 11.

"There seems little harm in taking out some insurance with a 25 basis points cut as the economy probably contracted in the second quarter due to SARS, global demand remains weak, and Taiwan has scant inflation," wrote Rob Subbaraman, an economist at Lehman Brothers, in a research report last Friday.

Share buyback delayed
Chunghwa Telecom Co (中華電信) decided to delay plans to buy back 10 percent of its outstanding shares to sometime in the second half of the year.

"The share buyback aims to lift shareholder's earning by reducing issued capital and to strengthen the efficiency of capital use," the company said in a statement on Tuesday.

While details of the repurchase still need to be further discussed with the Chunghwa Telecom Workers Union, it said.

Originally the telecom giant, which the government owns 80 percent shares of it, hopes to fulfill the share buyback before its plan to sell 13.8 percent stake in the company in the form of American Depositary Receipts next month.

The plan was altered because of opposition from the union who has three representatives on the company's 15-member board.

M2 grows 2.6 percent
The nation's money supply grew at the fastest pace in four months last month as foreign investors bought more local stocks and banks boosted investment and lending, the central bank said.

M2, the broadest measure of money supply, grew 2.6 percent from a year earlier after expanding 2.1 percent in April, the bank said in a statement.

M1B money supply, which excludes time deposits and foreign-currency deposits included in M2 money supply, rose 7.1 percent last month after increasing 6.0 percent in April.

M1A, which tracks net currency in circulation plus checking accounts and passbook deposits, grew 7.3 percent after expanding 8.5 percent the previous month, yesterday's report showed.

Total loans and investments by major financial institutions fell 0.4 percent last month after dropping 1.3 percent in April, the central bank said.

Lone Star buys bad loans
Lone Star Funds will buy the bad loans of failed lender Kaohsiung Business Bank (高雄企銀) for NT$8.23 billion (US$238 million), paying less than two-fifths of the face value of the loans.

The Dallas, Texas-based Lone Star beat six other local and foreign companies in the Taipei auction, the Ministry of Finance said in a statement on Tuesday. Kao-hsiung has been in government custody since January last year.

The assets included NT$8.37 billion of corporate lending and NT$13.4 billion of consumer loans that haven't been written off Kao-hsiung books, according to the statement.

The government plans to hold another auction for the remaining operations, assets and liabilities of Kaohsiung after obtaining approval from lawmakers in the next session of legislature.

NT dollar holds steady
The New Taiwan dollar yesterday remained strong against its US counterpart, up NT$0.024 to close at NT$34.556 on the Taipei foreign exchange market.

Turnover was US$281 million.
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