TAIPEI : Taiwan's financial regulator has barred foreign investors from parking funds in time deposits in a bid to curb "hot money" flowing into the island, according to authorities.

The Financial Supervisory Commission said in a statement that the measure, effective immediately, followed a recommendation from the central bank, which is keen to curb speculative activity in the exchange market.

"We are not imposing any capital control, at least for now," said Spencer Lin, head of central bank's forex department.

"They should buy stocks or bonds... rather than parking the money in time deposits," he said.

"Hot money" refers to short-term speculative funds that move speedily across borders in search of quick gains, and is criticised for adding to instability in global financial markets.

The central bank has recently warned against currency market speculation, hoping to prevent the US dollar from falling further against the local unit.

Taiwan's trade-dependent economy saw exports drop 27.3 percent year on year in the first ten months of 2009, and the government is keen to protect its competitiveness by keeping the local dollar from strengthening too much.

- AFP /ls