The New Taiwan dollar declined by the most in more than a week on concern the global economic slowdown will cut demand for Taiwan’s electronics exports. Bonds rose.
The currency fell against the US dollar as a report last week showed exports fell 8.3 percent last month from a year earlier, the biggest drop in more than three years, on weaker demand from China.
“The market is consolidating holdings for the time being, both in stocks and currencies,” said Irene Cheung, a corporate director for local-markets trading at ABN Amro Bank NV in Singapore. “There will be further downside in the Taiwan dollar. The market is looking at the real problems that the economy is facing.”
The currency fell 0.2 percent to NT$32.874 as of the 4pm close, Taipei Forex Inc said. It earlier touched NT$32.898.
The government might help chipmakers with short-term financing, the Chinese-language United Evening News reported on Monday, citing Vice Minister of Economic Affairs Shih Yen-shiang (施顏祥).
Taiwan’s 10-year bonds rose on speculation the central bank will cut interest rates.
Ten-year bond yields fell to the lowest since January 2006 after the central bank cut interest rates for the fourth time in seven weeks on Friday and said “the risk of an economic slowdown has risen.”
“Bonds are in a long-term bull market,” said Sam Chang, a debt trader at Polaris Securities Co (寶來證券) in Taipei. “The central bank will probably keep cutting interest rates.”
The yield on the benchmark 2.125 percent bond maturing September 2018 declined 7.7 basis points to 1.743 percent as of the 1:30pm close in Taipei, the GRETAI Securities Market said.
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