The nation’s central bank sold NT$100 billion (US$335.6 million) in 364-day certificates of deposit at an average interest rate of 0.87 percent at an auction on Friday, the lowest level in 17 months, with the outstanding issuance totaling NT$1.2 trillion thus far.
The sale attracted bids for 3.19 times the amount on offer, according to a statement posted on the bank’s Web site.
The Friday sale marked the central bank’s 28th such sale since April 2010, as the monetary authorities seek to absorb excess funds in the market.
The sale of these instruments would have the same effect as hiking local commercial banks’ reserve requirement ratio by 4.5 percentage points to tighten up their credit condition, according to the central bank.
As the central bank last month left policy interest rates unchanged and uncertainties about the global economy remained unchanged as well, investors have recently sought shelter in either bonds or certificates of deposit.
The central bank on June 21 announced its policy interest rates would stay the same, marking the fourth straight quarter that it has decided to hold rates at their current low levels.
On Thursday last week, three central banks in the UK, China and Europe announced new easing monetary measures to boost their economies, raising wider pessimism over global economic prospects.
As a result, the Friday sale of the certificates of deposit saw the average yield hit 0.870 percent, which was less than the 0.878 percent achieved in the previous sale on June 8 and represented the lowest since the sale on March 9 last year, when the average yield reached 0.877 percent, according to the central bank’s data.