Taiwan dollar declines on Greek downgrade, rising oil prices
Bloomberg , Taiwan News, Newspaper
2012-02-24 01:43 PM
Taiwan’s dollar dropped for a third day and government bonds were steady as a Greek rating downgrade and oil prices at a nine-month high spurred concern global growth will slow, deterring risk-taking.

Fitch Ratings lowered Greece’s credit grade by two levels to C from CCC yesterday, saying a default is highly likely in the near term. Crude for April delivery reached $106.72 a barrel in New York yesterday, the highest level since May 5. China’s manufacturing may shrink for a fourth month in February, an index from HSBC Holdings Plc and Markit Economics showed yesterday. The preliminary reading for this month is 49.7. Fifty is the dividing line between expansion and contraction.

“Trading is still quite thin as investors aren’t certain with the direction yet, with the developments in Europe,” said George Pu, a Taipei-based fixed-income trader at Sinopac Securities Corp. “Demand for government bonds is stronger as some people think the private sector’s outlook is worsening.”

The Taiwan dollar fell 0.1 percent to close at NT$29.596 against its U.S. counterpart in Taipei, according to Taipei Forex Inc. The currency has strengthened 2.3 percent this year.

The yield on the government’s 1.25 percent bonds due March 2022 was steady at 1.280 percent, after falling to 1.273 percent earlier, prices from Gretai Securities Market show. The benchmark 10-year rate reached 1.260 percent on Feb. 16, the lowest closing level since Dec. 19.

The overnight money-market rate, which measures interbank funding availability, was little changed at 0.402 percent, according to a weighted average compiled by the Taiwan Interbank Money Center.

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