Tai­wan dol­lar loses value on sus­pected cbank in­ter­ven­tion

The Pak Banker - - Front Page -

TAIPEI: Tai­wan's dol­lar re­versed gains in the fi­nal two min­utes of trad­ing on spec­u­la­tion the cen­tral bank bought the dol­lar to curb ap­pre­ci­a­tion that may hurt ex­porters.

The sus­pected in­ter­ven­tion came as the Min­istry of Fi­nance re­ported that ex­ports in­creased 21.8 per­cent in Novem­ber from a year ear­lier. The me­dian es­ti­mate of 12 econ­o­mists sur­veyed by Bloomberg News was for a gain of 18.9 per­cent. The cur­rency had ear­lier climbed as much as 1.8 per­cent af­ter the statis­tics bureau said yes­ter­day con­sumer prices in­creased 1.53 per­cent from a year ear­lier, the quick­est pace in nine months.

Higher in­fla­tion stems from "faster eco­nomic growth and leads to a stronger ex­change rate," said Hao-Yun Juan, a cur­rency trader at King's Town Bank in Taipei. "The cen­tral bank will let the Tai­wan dol­lar ap­pre­ci­ate in a mod­er­ate way."

Tai­wan's dol­lar ended at NT$30.630 against its U.S. coun­ter­part, com­pared with 30.625 yes­ter­day, ac­cord­ing to Taipei Forex Inc.

The cur­rency has ap­pre­ci­ated 1.3 per­cent in the past two months, the best per­for­mance among Asia's most-traded cur­ren­cies.

The cen­tral bank has bought the U.S. dol­lar al­most ev­ery day in the past eight months to shield ex­porters, ac­cord­ing to traders who de­clined to be iden­ti­fied as the mon­e­tary author­ity doesn't pub­licly dis­close such de­tails.

Tai­wan's pol­icy mak­ers have in­creased in­ter­est rates twice this year to 1.50 per­cent, and the cen­tral bank re­views rates next on Dec. 30.

"We ex­pect an­other 12.5-ba­sis point rate hike later this month, fol­lowed by one hike in each quar­ter in 2011," an­a­lysts led by Michael Spencer at Deutsche Bank AG said in a re­port dated yes­ter­day. -PB News

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