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Updated Thursday, March 11, 2010 10:54 am TWN, Bloomberg

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TWD pares gain as intervention seen

TAIPEI, Taiwan -- Taiwan's dollar pared gains, after reaching the strongest level in more than a month, on speculation the central bank intervened to slow appreciation that may hurt exports. Government bonds advanced.

The currency has climbed on all but one of the eight trading days so far this month as improving trade and investment ties with China, the world's fastest growing major economy, help attract funds from abroad. The monetary authority sold the local currency in late trading to limit gains, according to two traders who declined to be identified.

“The central bank doesn't want hot money to come in, speculating on the currency,” said Henry Lin, a currency trader at Taiwan Shin Kong Commercial Bank in Taipei.

The local dollar traded at NT$31.847 against its U.S. counterpart as of 4 p.m. local time, compared with NT$31.85 Tuesday, according to Taipei Forex Inc. It earlier touched NT$31.729, the strongest level since Feb. 6.

Government bonds climbed after a central bank official said today that the monetary authority will maintain a loose monetary policy stance.

The yield on the 0.875 percent bond maturing January 2015 fell two basis points, the biggest decline since Jan. 12, to 0.93 percent, according to Gretai Securities Market, Taiwan's biggest exchange for bonds. Its price rose 0.1022, or NT$102.2 per NT$100,000 face amount, to 99.7249. A basis point is 0.01 percentage point.

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