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Taiwan Holds Key Rate a Seventh Time as Economy Seen Recovering

Taiwan kept the benchmark interest rate unchanged for a seventh straight meeting as economic growth gathers pace on China’s recovery and inflation pressures recede.

The central bank held the discount rate on 10-day loans to banks at 1.875 percent, it said in a statement in Taipei today. The decision was predicted by all 20 economists in a Bloomberg News survey. The monetary authority has refrained from adjusting borrowing costs since raising the benchmark in June 2011.

Taiwan follows Asian nations including South Korea and Thailand in holding policy rates as data from China and the U.S. show the global economy is recovering. The island last month raised its estimates for exports and gross domestic product in 2013, and the central bank has said inflation will be more stable this year than in 2012.

“The economy is on track to a modest recovery and inflation pressures will remain tame,” Ma Tieying, a Singapore- based economist at DBS Group Holdings Ltd., said before the decision. “The central bank will probably keep the benchmark rate unchanged until the last quarter this year.”

The Taiwan dollar has lost almost 3 percent this year against the U.S. currency as the yen’s decline fanned concern the island’s central bank will influence the exchange rate to protect exporters. The monetary authority will maintain order in the foreign-exchange market if needed, Governor Perng Fai-Nan said earlier this year.

The island’s biggest companies, including Taiwan Semiconductor Manufacturing Co. and HTC Corp., compete with Japan’s Sony Corp. and South Korea’s Samsung Electronics Co. for global market share.

To contact the reporters on this story: Andrea Wong in Taipei at awong268@bloomberg.net; Chinmei Sung in Taipei at csung4@bloomberg.net

To contact the editor responsible for this story: Stephanie Phang at sphang@bloomberg.net

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