Taiwan sees 'no impact' from US debt downgrade

TAIPEI: The deputy governor of Taiwan's central bank sought to play down worries over the US debt downgrade on Saturday, saying it was expected to have "no impact" on the island.

"The public need not panic over the S&P downgrade as it is extremely unlikely that the US will violate the contracts," Chou A-Ting was quoted as saying by the state Central News Agency.

Chou pointed out that two other key agencies, Moody's and Fitch, still rated US Treasuries at top grade and US securities still had "high liquidity with rising prices," the report said.

But he said the central bank would adjust its asset allocation at the "appropriate time" depending on the international financial outlook, without elaborating, according to the report.

According to US Treasury data, Taiwan is the sixth biggest holder of US securities with $153.4 billion, while the US is also among the island's major trading partners.

With global markets already in turmoil, S&P cut the US rating late Friday from its top-flight triple-A one notch to AA+ and added a negative outlook.

Taiwan's stocks plunged 5.58 percent on Friday, the worst losses in a single session since the height of the global financial crisis in 2008.

Copyright AFP (Agence France-Presse), 2011