Taiwan promises stable currency

Bloomberg News Service

Taipei — Taiwan's central bank said it will intervene to stabilize the Taiwan dollar if foreign exchange markets become too volatile.

"In times of irrational expectations the central bank will adjust appropriately the Taiwan dollar to avoid fluctuations," the Central Bank of China said in a statement sent by fax.

Last month Standard & Poor's cut Taiwan's credit rating one notch to "AA," its third highest, on concern the administration of President Chen Shui-bian was doing little to repair the financial system or revive an economy that grew at its slowest rate in more than 26 years in the first-quarter.

The Taiwan dollar has fallen 4.8 percent against the U.S. dollar this year.

Taiwan's currency has moved more than 0.5 percent three times in the past six months, compared with 41 times for the Korean won in the same period, according to Bloomberg analysts.

"The Taiwan dollar is considered a highly managed currency because it's characterized by very low volatility," said Tim Condon, the chief economist in Asia outside of Japan.