s, but stressed that no emergency steps would be necessary in the meantime for the relatively stable local markets. Hsu Yi-hsiung, deputy governor of the Central Bank of China (CBC), said trading and liquidity in the Taiwan markets remained normal.
"The U.S. subprime storm sparked panic selling in Europe and Japan, but the local financial markets' performances today have been relatively stable," Hsu was cited by the United Evening News as saying at noon yesterday.
On Friday, the Taiwan dollar fell to as low as NT$32.944 to the U.S. dollar, its weakest level since June 21, when the intraday low was NT$33.050, as a sharp fall in stocks sparked expectations of foreign fund outflows.
The Taiwan dollar closed at NT$32.885 Thursday.
The TAIEX index fell 251.29, or 2.7 percent, to close at 8,931.31 yesterday, after climbing 3.6 percent in the past two days, on concerns global economic growth will cool as U.S. subprime mortgage losses prompt banks to curb lending.
Like most other Asian markets, the CBC sold U.S. dollars yesterday to prevent the local currency from weakening too much, dealers said.
But an unnamed CBC official was cited by Reuters as declining comment on whether the central bank had intervened in the market.
Central banks in Malaysia, Indonesia and the Philippines on Friday intervened to sell dollars, traders said, as their currencies succumbed to the selling of risky assets, as worries about credit markets escalated.
"The Taiwan dollar is determined by market demand and supply," the unnamed CBC official told Reuters.
"We will watch the situation very closely," the official said, when asked what the central bank would do to quell market concern over the U.S. subprime market woes.
The sell-off in risky assets gathered momentum Thursday after banks in Europe revealed losses from the troubled U.S. subprime mortgage sector, forcing the European Central Bank and Federal Reserve to pump money into financial markets.
Separately, Taiwan's top financial regulators said Thursday that exposure for local insurers and banks from investments in U.S. subprime mortgages was NT$70.6 billion.
Two insurers had reported losses of NT$450 million, a small amount compared with exposure of NT$30.2 billion for 12 companies in the sector, according to a statement from the Financial Supervisory Commission (FSC).
Some 16 of the 42 domestic lenders had NT$40.4 billion invested in subprime-related securities, but losses were minimal, the FSC said.
Last week, Taiwan financial stocks fell to their lowest level in almost seven weeks after mid-sized Taiwan Life Insurance said it had booked a NT$428 million loss after writing off its entire investment in a collapsed hedge fund managed by Bear Stearns Cos. Inc.
"Indiscriminate sell orders from panicked investors" sent shares lower yesterday, said Liu Juming, a fund manager at Ta Chong Investment Trust Corp.
Hon Hai Precision Industry, Taiwan's biggest electronics manufacturer, slid NT$11, or 3.9 percent, to NT$268.50.
Taiwan Semiconductor Manufacturing Company (TSMC), the world's biggest pure-play foundry, slumped NT$2.30, or 3.6 percent, to NT$61.50.
MediaTek Inc., Taiwan's top IC designer, slipped NT$25, or 4.4 percent, to NT$548.
U.S. stocks tumbled Thursday by the most in more than five months after BNP Paribas SA barred withdrawals from funds that owned subprime, or higher risk, home loans.
Additionally, a Goldman Sachs Group Inc. fund is selling some holdings after it lost 15 percent of its value this year through July 27, the Wall Street Journal said yesterday. Goldman representatives didn't immediately respond to requests for comment. The U.S. is Taiwan's second-largest export market, after China.
