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Central bank may sell currency

Taiwan's central bank may sell its currency to slow down the pace of appreciation as it asks companies not to switch proceeds of overseas securities sales into the New Taiwan dollar.

"Central banks will resist [currency gains], most strongly in the Taiwan dollar," ING said in a report.

The New Taiwan dollar continued to rise against its US counterpart yesterday at the Taipei foreign exchange market, up NT$0.046 to close at NT$34.412. The turnover totalled US$1.464 billion, compared with Friday's US$1.02 billion.

The local currency, which opened yesterday at NT$34.435 against the greenback, has gained 1.3 percent in the past month, drawing concerns the central bank will sell its domestic dollar to prevent the currency from climbing too much, too fast.

The central bank may ask companies such as Cathay Financial Holding Co (國泰金控), which have raised money through overseas securities sales, to avoid converting their funds through the spot market, a local Chinese-language newspaper reported, without citing the source of its information.

The central bank is concerned the Taiwan dollar will strengthen amid a series of convertible bond sales planned by the country's companies, the paper reported, citing Chou A-ting (周阿定), director general of the foreign exchange department.

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