Taiwan’s dollar dropped the most in more than a week and government bonds rallied after policy makers cut the economy’s growth forecast.
The island’s gross domestic product will rise 4.38 percent next year, the government said yesterday, revising an earlier prediction for an increase of 4.58 percent. The Bloomberg-JPMorgan Asia Dollar Index fell for a second day as China’s Purchasing Managers’ Index dropped to 50.4 in October, the lowest reading since February 2009.
“I think the signs are clearer and clearer that the economy’s slowing,” said Eric Hsing, a fixed-income trader at First Securities Inc. in Taipei. “There are lingering issues in Europe, and Asia’s growth outlook’s getting uncertain. Traders are becoming careful, that’s why volumes are thinner recently.”
Taiwan’s dollar fell 0.5 percent, the most since Oct. 20, to NT$30.086 against its U.S. counterpart, according to Taipei Forex Inc.
The island’s economy expanded 3.37 percent in the third quarter from a year earlier, the slowest pace in two years, the government reported yesterday toward the end of currency trading.
The yield on the government’s 1.25 percent bonds due September 2021, the most-traded government securities, declined three basis points, or 0.03 percentage point, to 1.339 percent, prices from Gretai Securities Market show.
The overnight money-market rate, which measures interbank funding availability, was steady at 0.398 percent, according to a weighted average compiled by the Taiwan Interbank Money Center.