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Taiwan Dollar Has Biggest Monthly Drop Since ’97 on Slowdown

Sept. 30 (Bloomberg) -- Taiwan’s dollar had its biggest monthly drop since October 1997 as a slowing global economy prompted investors to favor safer bets than emerging-market assets. Government bonds advanced.

The island’s central bank left the discount rate on 10-day loans to banks unchanged at 1.875 percent yesterday as a stagnant U.S. economy and Europe’s debt crisis dimmed the outlook for Taiwan’s exports, which account for more than two-thirds of its economy. Overseas investors sold $2.6 billion more of the island’s equities than they bought this month, according to exchange data.

“The worst time is still not over, the concern over a global recession is looming,” said Henry Lin, a Taipei-based foreign-exchange trader at Taiwan Shin Kong Commercial Bank.

Taiwan’s dollar retreated 5.1 percent in September to NT$30.506 against its U.S. counterpart as of the 4 p.m. local close, according to Taipei Forex Inc. It dropped 0.2 percent today and 5.9 percent this quarter. Lin said the currency could weaken to NT$31 by year-end.

The yield on the 1.25 percent notes due September 2021 fell three basis points, or 0.03 percentage point, today to 1.273 percent, prices from Gretai Securities Market show. The benchmark rate dropped 16 basis points this month and 23 basis points this quarter.

The overnight money-market rate, which measures interbank funding availability, was little changed at 0.396 percent, according to a weighted average compiled by the Taiwan Interbank Money Center.

To contact the reporter on this story: Andrea Wong in Taipei at awong268@bloomberg.net

To contact the editor responsible for this story: James Regan at jregan19@bloomberg.net.

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