Bloomberg News

Taiwan Dollar Completes Biggest Rally Since January; Bonds Drop

October 28, 2011

Oct. 28 (Bloomberg) -- Taiwan’s dollar advanced the most since January this week as global funds added to holdings of the island’s stocks on optimism faster U.S. growth and progress on Europe’s debt crisis are brightening Asia’s economic outlook.

International investors bought $1.6 billion more local shares than they sold this week, according to exchange data. U.S. President Barack Obama hailed a plan to boost Europe’s bailout fund and write down Greek debt as an “important first step” in resolving the crisis. The world’s biggest economy grew at a 2.5 percent annual rate in the third quarter, the fastest pace in a year, figures showed yesterday.

“The progress made in Europe boosted stocks and the Taiwan dollar,” said James Wang, a fixed-income trader at Yuanta Securities Co. in Taipei. “But a slowing economy will still weigh on the local bond market.”

Taiwan’s dollar strengthened 1.4 percent this week, the most since Jan. 7, to NT$29.869 against its U.S. counterpart, according to Taipei Forex Inc. The currency climbed 0.7 percent today.

The yield on the government’s 2 percent bonds due July 2016, the most-traded government debt, increased two basis points, or 0.02 percentage point, to 1.072 percent this week, prices from Gretai Securities Market show. The rate increased one basis point today. Wang predicts it could fall to 1.0 percent in a month.

The overnight money-market rate, which measures interbank funding availability, was steady today and this week at 0.398 percent, according to a weighted average compiled by the Taiwan Interbank Money Center.

--Editors: Andrew Janes, Ven Ram

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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