BS: Taiwan Dollar Declines in Late Trading on Suspected Intervention
Nov. 17 (Bloomberg) -- Taiwan’s dollar fell in late trading on speculation the central bank intervened to prevent currency gains from eroding exporters’ earnings.
The Taiwan dollar earlier rose as much as 1.4 percent before a government report tomorrow that may show the economy expanded by more than 8 percent for the fourth straight quarter. The currency has strengthened 5.4 percent since June as overseas investors pumped $6.8 billion into equities this year.
“It was the central bank that set the closing price,” said Eric Hsing, a fixed-income trader at First Securities Inc. in Taipei. “The central bank is trying to make books look better for exporters and banks regarding their overseas earnings.”
The local dollar fell 0.2 percent to NT$30.793 against its U.S. counterpart as of the 4p.m. close of trading, according to Taipei Forex Inc. The currency reached NT$30.015 on Nov. 12, the strongest level since March 2008.
Taiwan’s gross domestic product increased 8.3 percent from a year earlier in the third quarter, according to the median estimate of economists surveyed by Bloomberg. It jumped about 13 percent in the first half of 2010, after sliding 1.9 percent last year, official figures show.
“Exporters are selling the U.S. dollar for the Taiwan currency, and there’re some fund inflows too,” said Henry Lin, a Taipei-based currency trader at Taiwan Shin Kong Commercial Bank. “The Taiwan economy is doing well.”
Central Bank Intervention
The Central Bank of the Republic of China (Taiwan) has been buying the U.S. dollar almost every day to check appreciation in the local currency, according to traders familiar with the monetary authority’s operations who asked not to be identified because of the sensitivity of the matter.
Export orders, indicative of shipments in the next one to three months, increased 14.1 percent in October from a year earlier, following a 16.7 percent gain in September, according to the median estimate of economists in a Bloomberg survey before a Nov. 19 report.
Government bonds were little changed. The yield on the 1.125 percent note due September 2020 was at 1.335 percent, according to Gretai Securities Market, the island’s biggest exchange for bonds.
