Credit Outlook, Taiwan’s Dollar Retreats After S&P Cuts U.S

Credit Outlook, Taiwan’s Dollar Retreats After S&P Cuts U.S ; Taiwan’s dollar dropped for a third day after Standard & Poor’s cut the U.S. long-term credit outlook, raising concern about the outlook for the world’s largest economy and sapping demand for emerging-market assets.

The Taiex index of shares declined 0.9 percent after New York-based S&P said there’s a one-in-three chance the AAA credit rating of the U.S. government might be cut within two years unless policy makers agree on a plan to reduce budget deficits and the national debt.

“The cut in the U.S. credit rating is quite worrying and has damped risk-taking,” said Ivy Leung, a Taipei-based fixed- income trader at Polaris Securities Co.

Taiwan’s dollar weakened 0.2 percent to NT$29.145 against its U.S. counterpart as of 9:25 a.m. local time, according to Taipei Forex Inc. It touched NT$29.159, the weakest level since April 13. The local dollar has rallied 5.9 percent over the past six months, the best performance among the 10 most-traded Asian currencies

The yield on the 1 percent bond due January 2016, the most- active government security, was little changed at 1.069 percent, compared with 1.072 percent yesterday, according to Gretai Securities Market, the island’s biggest exchange for bonds.

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