Taiwan cuts interest rate amid falling exports, slowing economy

The cut on the 10-day loan rate to 3.25 percent from 3.5 percent came because Taiwan's exports have declined while consumer and investment expenditures dropped, the Central Bank said.

"Our economy has come under pressure for a slowdown," said Central Bank Governor Perng Fai-nan. "We hope the rate cut can stimulate consumption to spur economic growth."

The announcement helped to stabilize the Taiwan stock market early Thursday after the benchmark index fell 9.3 percent in the last three trading days in the wake of the financial crisis in the U.S. and Europe.

But the rate cut failed to spur a market rally amid the weak sentiments, traders said.

The world economic slowdown has had a severe impact on Taiwan's export-driven economy.

Taiwan's total exports fell 1.6 percent in September to US$21.8 billion, the first decline in six years. Exports to mainland China and Hong Kong - Taiwan's largest export market - dropped 16.3 percent to US$8.2 billion during the month.

Overall trade surplus dropped sharply to US$8.5 billion in the first nine months this year, a decline of 51 percent from the same period last year.

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