The New Taiwan dollar fell to the lowest level in more than two weeks on concern Taiwan’s economy was slowing. Bonds extended declines after a 10-year debt sale.
The benchmark discount rate was kept at 1.875 percent yesterday, as predicted by all 15 economists surveyed by Bloomberg News. Central bank Governor Perng Fai-nan (彭淮南) said a lingering European debt crisis may further weaken exports, which dropped for a third straight month last month. Taiwan sold NT$40 billion (US$1.3 billion) in 10-year notes on Friday at 1.21 percent, higher than the 1.195 percent finance companies forecast in a Bloomberg survey.
“Yields rose a bit as there was some speculation among traders that the central bank might cut rates due to the bad economic performance,” said Eric Hsing, a fixed-income trader at First Securities Inc (第一金證券) in Taipei. “If the falling exports situation persists, the central bank still needs to cut rates at some point.”
The NT dollar weakened 0.2 percent to NT$29.968 against its US counterpart on Friday, according to Taipei Forex Inc. It touched NT$30.01 earlier, the lowest level since June 6. The currency fell 0.1 percent this week.
Official data showed on Friday that Taiwan’s jobless rate rose to 4.25 percent last month from 4.19 percent in April, and industrial production dropped 0.21 percent from a year earlier, a third monthly decline.
One-month implied volatility, a measure of exchange-rate swings used to price options, dropped four basis points, or 0.04 percentage point, to 4.61 percent. The gauge dropped 103 basis points in the five-day period.
The yield on the 1.25 percent securities maturing in March 2022 climbed two basis points on Friday and last week to 1.205 percent, according to GRETAI Securities Market.
The overnight interbank lending rate was little changed at 0.511 percent, according to a weighted average compiled by the Taiwan Interbank Money Center.
Asian currencies fell last week, led by India’s rupee and the Malaysian ringgit, as signs the world economy is deteriorating dimmed the outlook for regional exports and curbed demand for emerging-market assets.
The US Federal Reserve cut its growth forecast for this year last week and the Bank of Korea said its projection for South Korea may be lowered next month. Malaysia forecast that its services output would expand 5.1 percent this year, less than the 6.8 percent gain last year. Manufacturing in China, Asia’s biggest economy, might shrink for an eighth month this month, a preliminary purchasing managers index showed.
The Indian rupee slumped 2.9 percent this week to 57.1550 per US dollar in Mumbai, touching a record low of 57.3275 on Friday, according to prices compiled by Bloomberg. Malaysia’s ringgit declined 1 percent to 3.1933, while Thailand’s baht slid 0.9 percent to 31.76. The Bloomberg-JPMorgan Asia Dollar Index fell 0.3 percent.
The baht had its largest weekly decline in a month. The Bank of Thailand cut its export-growth forecast for this year to about 8 percent from 9 percent because of the crisis in Europe. Exports gained 0.65 percent last month after a decline of 3.67 percent in April, while imports climbed 8 percent following a 7.87 percent increase, according to median estimates of economists in Bloomberg News surveys before government data next week.
Elsewhere, Indonesia’s rupiah fell 0.6 percent this week to 9,438 per US dollar, while the Philippine peso slid 0.5 percent to 42.45. China’s yuan ended the week at 6.3642, little changed from its June 15 close of 6.3651. South Korea’s won strengthened 0.8 percent to 1,157.05, a fourth weekly advance.