The New Taiwan dollar fell the most in a single day of trading for more than a year as foreign investors cut holdings of the nation’s equities and traders said the central bank intervened.
According to two traders familiar with the central bank’s operations, who declined to be identified, the bank sold the currency in the final minutes of trading,
Five-year bonds rose on speculation investors would seek safety in government debt as equities declined.
“The stock market is down and there’s a good chance foreign capital will move out of Taiwan,” said Juan Hao-yun, a foreign-exchange trader at Kingstown Bank (京城銀行) in Taipei.
He also predicted that the central bank would intervene when interviewed earlier yesterday.
The NT dollar slid 0.8 percent to close at NT$32.100 against its US counterpart, its worst performance since April 8, 2009, according to Taipei Forex Inc. It had earlier gained as much as 0.6 percent. The currency has weakened in the final minutes of trading almost every day the past month.
Policy makers issued a table to news organizations yesterday showing that the NT dollar’s slide was in line with losses in other currencies including the Singaporean dollar.
Meanwhile, the MSCI Asia Pacific index of shares lost 2.7 percent on concerns that Europe’s economic recovery will falter as regional governments tighten their purse strings and boost taxes to rein in budget deficits. The benchmark TAIEX fell 2.2 percent.
Overseas investors sold US$319 million more Taiwanese equities than they bought yesterday, adding to this month’s net sales of US$2.6 billion, according to stock exchange data.
“The stock market is performing badly ... Money is rushing to government bonds,” said James Wang, a bond trader at Yuanta Securities Co (元大證券) in Taipei.
The yield on Taiwan’s 0.875 percent bond maturing in January 2015 fell one basis point to 0.96 percent, according to Gretai Securities Market, the nation’s biggest exchange for bonds.
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