The New Taiwan dollar fell the most in six weeks as Asian stocks retreated on renewed concern that the global recession would deepen, spurring investment outflow. Bonds were little changed.
The NT dollar snapped a two-day gain, extending a decline this quarter to 3 percent after US Treasury Secretary Timothy Geithner said some financial institutions would need substantial government aid, and factory production in Japan slumped for a fifth month.
The TAIEX dropped 3 percent, the most since Jan. 15, following last week’s 8.7 percent rally, the biggest since October 2002.
“We are seeing a bit of a correction in all stocks and currencies today [yesterday],” said David Cohen, director of Asian Economic Forecasting at Action Economics in Singapore.
The NT dollar fell 0.7 percent to NT$34.015 as of the close, the biggest drop since Feb. 17, Taipei Forex Inc said.
Overseas investors sold more equities than they bought yesterday for a second day.
The MSCI Asia-Pacific Index lost 3.7 percent, following a five-day, 7.5 percent jump that took valuations to the highest since December 2007.
The nation’s export orders extended the longest slump since 2001 last month as global demand for electronics goods tumbled.
“A number of Asian currencies like the [South] Korean won and Taiwan’s dollar had been benefiting from the global stocks rebound on optimism the economy will start to pick up before the year-end,” said Cohen. “But we’ll have to swallow a lot of grim data before that theory can be proven.”
Meanwhile, the government’s 10-year bonds were little changed.
An index of leading indicators, a gauge of economic conditions three months ahead, fell 0.5 percent last month from the previous month after a 3.2 percent decline in January, the Council for Economic Planning and Development said on Friday.
The nation slipped into a recession in the fourth quarter, when GDP shrank 8.36 percent.
“A lot of the bonds are held by banks,” said Chen Hung-hsiu, a debt trader at Grand Cathay Securities Corp (大華證券) in Taipei. “The outlook for the economy is murky, so banks don’t need to cut bond holdings.”
The yield on the 1.375 percent bond maturing in March 2019 declined 1 basis point to 1.53 percent as of the close in Taipei, said GRETAI Securities Market, the nation’s biggest exchange for bonds.
Its price climbed 0.065 or NT$65 per NT$100,000 (face amount) to 98.5511.
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