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Stocks down sharply on economic woes as TWD dips NT$0.033

Taiwan's stocks and currency both fell yesterday, although the New Taiwan dollar had posted a sharp gain in early trading.

The TAIEX closed sharply lower to end below the 7,500-point mark amid lingering concerns over global economic fundamentals, dealers said.

Selling focused on large-cap stocks in both the high-tech and old economy sectors as investors attempted to profit in the futures market, where they had built up a large number of short-position contracts, they said.

The weighted index closed down 140.29 points, or 1.84 percent, at 7,451.72, after moving between 7,448.06 and 7,501.22, on turnover of NT$81.79 billion.

The market opened down 1.28 percent. The electronics sector led the downside after several heavyweights reported disappointing sales data for September, the dealers said.

The New Taiwan dollar closed at NT$29.432 against the greenback, weakening NT$0.033, on trade volume of US$681 million.

Devaluation Race

The currency opened significantly lower yesterday on a similar decline in the South Korean won, raising speculation whether the two countries are again engaged in a currency devaluation race to boost exports.

The won dropped after the South Korean central bank announced moves to lower interest rates by 0.25 percent. It weakened to 1,117.3 against the U.S. dollar and stabilized to 1,114.6 at 12:45 p.m.

The New Taiwan dollar gave a similar performance. It opened NT$0.091 lower at NT$29.49 and moved back up to NT$29.298, strengthening NT$0.101 on exporters' effort to sell their U.S. dollar holdings.

The upward trend in the morning was in contrast to other Asian currencies, including the Chinese yuan, the Thai baht, the Philippine peso and the Singaporean dollar, all of which depreciated in the morning session. At the end of trade, the local currency devalued again to NT$29.432, on suspected intervention by the Central Bank of the Republic of China (Taiwan).

According to dealers, the New Taiwan dollar should be relatively stable in the short term, given no major intervention measures by the central bank. The New Taiwan dollar should be ranged between NT$29 and NT$29.5 in the near future, experts said.

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