Taiwan's dollar falls on concern central bank to prevent gains

The island's central bank tightened rules on foreign-exchange derivatives, China Times reported on its Web site yesterday, without saying where it got the information. The local currency has strengthened 1.7 percent this year as investors based abroad bought US$12.9 billion more local shares than they sold.

“The central bank has been obliged to intervene, to prevent substantial appreciation, not wanting to lose competitiveness,” said David Cohen, director of Asian forecasting at Action Economics in Singapore.

The island's dollar dropped 0.1 percent to close at NT$32.31 versus the U.S. currency in Taipei, according to Taipei Forex Inc. It rose 0.2 percent in the last three trading days.

Central bank Governor Perng Fai-nan said last month excessive currency moves hurt the economy and the bank will take steps if irregular factors cause volatility. Policy makers can try to influence exchange rates by buying or selling currencies.

Taiwan won't start official negotiations or sign an Economic Cooperation Framework Agreement (ECFA) with China in the 4th cross-strait talks to take place from Dec. 21 to 25 in Taichung, Chiang Pin-kung, chairman of the Taipei-based Straits Exchange Foundation said, according to a statement on its Web site.

Five-year bonds were little changed. The yield on the 2 percent note maturing July 2014 held at 0.89 percent, according to Gretai Securities Market, Taiwan's biggest exchange for bonds.

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