Bloomberg News

Taiwan’s Dollar Rises to Three-Week High on Stock Inflows

October 13, 2011

Oct. 13 (Bloomberg) -- Taiwan’s dollar climbed to a three- week high as overseas investors added to their holdings of the island’s shares amid optimism the U.S. will take further action to prevent a recession in the world’s biggest economy.

The currency held on to gains after China, the biggest buyer of the island’s exports, released September trade data showing import growth slowed more than economists forecast. Some Federal Reserve officials wanted to keep further asset purchases, a policy known as quantitative easing, as an option to boost the U.S. economy, according to the minutes of a Sept. 20-21 policy meeting that were published yesterday.

“Looks like a QE3 is inevitable given how bleak the U.S. economy is looking,” said Tarsicio Tong, a Taipei-based trader at the Union Bank of Taiwan. “That will send some Asian currencies and commodities higher.”

Taiwan’s dollar closed 0.2 percent stronger to NT$30.329 against its U.S. counterpart, according to Taipei Forex Inc. It touched NT$30.250 earlier, the strongest level since Sept. 22. Overseas investors pumped about $260 million into Taiwan’s stock market today, building on net purchases of $392 million in the last three days, exchange data show.

The yield on the government’s 2 percent bonds due July 2016, the most-traded securities, dropped one basis point, or 0.01 percentage point, to 1.03 percent, prices from Gretai Securities Market show. The rate touched 1.05 percent on Oct. 11, the highest level for benchmark five-year debt in almost two months.

The overnight money-market rate, which measures interbank funding availability, was little changed at 0.395 percent, according to a weighted average compiled by the Taiwan Interbank Money Center.

China’s imports rose 20.9 percent in September from a year earlier, after gaining 30.2 percent the previous month, official data showed today. The median estimate of economists surveyed by Bloomberg was for a 24.2 percent increase.

--Editors: Simon Harvey, James Regan

To contact the reporter on this story: Andrea Wong in Taipei at awong268@bloomberg.net

To contact the editor responsible for this story: Sandy Hendry at shendry@bloomberg.net


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