Taiwan keeps wary 'eye on US downgrade'

Taiwan, one of biggest foreign holders of US debt, on Sunday was keeping a close eye on developments after the US ratings downgrade and a local stock market plunge, local media reported. Vice-Premier Sean Chen, in charge of the island's economic issues, held an "internal meeting" of relevant government agencies on Sunday, the United Evening News said. Central bank governor Perng Fai-nan was monitoring developments in the international community, it said. The moves came after Standard & Poor's Friday cut the US credit rating from the top notch triple-A to AA+, sparking fears that the world still reeling from the 2008 global financial crisis may be hit by a double dip recession. Ahead of the downgrade, Taiwan's weighted index on Friday tumbled 5.58 percent, one of the steepest falls among the world's stock exchanges, as investors feared the island's export-reliant economy may be hit hard in the event of another financial crisis. The fall was the worst loss in a single session since the height of the global financial crisis in 2008. The plunge prompted President Ma Ying-jeou to appeal for calm among panic-stricken investors at a news conference over the weekend. He said Taiwan's fundamentals were sound and said the government would strive to cushion any negative impacts on the local economy. In its editorial, the United Daily News warned that "the downgrade may not be a deadly blow to the global economies, but its influence will be far-reaching". According to US Treasury data, Taiwan is the sixth biggest foreign holder of US debt with $153.4 billion, while the United States is also among the island's major trading partners.