Bloomberg News

Taiwan Dollar, Bonds Set for Weekly Gains on Investor Inflows

February 05, 2012

Feb. 3 (Bloomberg) -- Taiwan’s dollar and government bonds headed for weekly gains as global funds increased holdings of the island’s assets and on prospects inflation is slowing.

The local dollar was set for the biggest five-day rally since January 2011 after overseas investors bought $1 billion more Taiwanese stocks than they sold in the first four days of this week, taking net purchases for the year to $2.1 billion, according to exchange data. A government report on Feb. 6 may show consumer prices rose 1.99 percent last month from a year earlier, compared with 2.03 percent in December, according to the median estimate of economists in a Bloomberg survey.

“Buying interest on shorter bonds from foreign investors is pretty strong,” said Ivy Leung, a Taipei-based fixed-income trader at Polaris Securities Co. “The appreciation in the Taiwan dollar has contributed to a bond rally.”

The Taiwan dollar strengthened 1.5 percent this week to NT$29.539 against its U.S. counterpart as of 9:46 a.m. local time, according to Taipei Forex Inc. The currency touched NT$29.420 earlier, the strongest level since Sept. 13. It was little changed today.

The yield on the government’s 1 percent notes due January 2017 dropped four basis points, or 0.04 percentage point, to 0.931 percent during the five-day period, prices from Gretai Securities Market show.

The overnight money-market rate, which measures interbank funding availability, fell one basis point this week and today to 0.392 percent, according to a weighted average compiled by the Taiwan Interbank Money Center.

--Editors: Simon Harvey. Sandy Hendry

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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