Taiwan Dollar Ends Four-Day Drop on ECB, Greek Move; Bonds Fall

Taiwan’s dollar strengthened, snapping a four-day decline, as Greece’s move to scrap a referendum and the European Central Bank’s unexpected cut in interest rates bolstered demand for emerging-market assets.

The gain limited this week’s loss to 0.6 percent, as the central bank intervened in the currency market to ensure stability, said Teck Kin Suan, an economist at United Overseas Bank Ltd. Central bank Governor Perng Fai-nan pledged to “maintain order” in the exchange rate, in response to questions from lawmakers in parliament on Nov. 2.

“The central bank is always there in the market,” Singapore-based Suan said. “I expect some strengthening of the Taiwan dollar, together with other Asian currencies, as the uncertainty over the Greek situation lessened. In terms of investment, Asia including Taiwan is still attractive.”

The Taiwan dollar appreciated 0.5 percent to NT$30.058 against its U.S. counterpart as of 9:11 a.m. local time, according to Taipei Forex Inc. It declined from NT$29.869 at the end of last week.

ECB officials unanimously agreed to lower the benchmark interest rate by 25 basis points to 1.25 percent yesterday, a move predicted by four of 55 economists surveyed by Bloomberg News. Greek Finance Minister Evangelos Venizelos said yesterday the country won’t hold a referendum on a bailout package agreed last week with euro region leaders. The vote prompted the European Union to halt aid, pushing Greece toward a default.

The yield on the 1.25 percent government bond due August 2021 rose one basis point to 1.33 percent, paring its weekly decline to five basis points, or 0.05 percentage point, this week, prices from Gretai Securities Market show.

Taiwan will auction NT$100 billion ($3.3 billion) of 364- day certificates of deposit, with the central bank announcing the average yield at 12:30 p.m. today. The central bank last sold similar maturity certificates on Oct. 7 at an average interest rate of 0.984 percent.

To contact the editor responsible for this story: Sandy Hendry at shendry@bloomberg.net

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