Bloomberg News

Taiwan Bonds Decline This Week After Central Bank Holds Rate

January 07, 2012

Jan. 6 (Bloomberg) -- Taiwan’s government bonds fell this week after the central bank kept borrowing costs unchanged at the end of last month. The currency advanced.

The monetary authority will sell NT$100 billion ($3.3 billion) of 364-day certificates of deposit today, after policy makers left the benchmark rate at 1.875 percent on Dec. 29, and said it will keep up the monthly bill auctions to drain excess funds from the financial system. The government reported toward the end of trading yesterday that consumer prices rose 2.03 percent in December from a year earlier, more than the 1.15 percent economists estimated in a Bloomberg survey and November’s 1.01 percent increase.

“Investors are waiting for the 364-day bill sale,” said George Pu, a Taipei-based bond trader at Sinopac Securities Corp. “The CPI data was heavily affected by the cost of vegetables, so the effect should be temporary.”

The yield on the 1 percent notes due January 2017 climbed one basis point to 1 percent during the five-day period as of 9:40 a.m. local time, prices from Gretai Securities Market show. The rate was little changed today.

The island’s dollar appreciated 0.1 percent to NT$30.249 against its U.S. counterpart this week, according to Taipei Forex Inc. It advanced 0.1 percent today.

The overnight money-market rate, which measures interbank funding availability, was little changed at 0.399 percent, compared with 0.405 percent a week ago according to a weighted average compiled by the Taiwan Interbank Money Center.

--Editors: Simon Harvey, Andrew Janes

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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