Taiwan Dollar Advances After Global Funds Buy Stocks; Bonds Fall
February 08, 2012, 4:22 AM ESTBy Andrea Wong
Feb. 8 (Bloomberg) -- Taiwan’s dollar strengthened for a second day after global funds boosted holdings of local stocks on optimism the island’s economic recovery will withstand Europe’s debt crisis. Government bonds fell.
International investors bought $386 million more Taiwanese shares than they sold today, taking net purchases for the week to $728 million, exchange data show. The economy will grow 3.91 percent in 2012, the statistics bureau said last week. Gross domestic product rose 4 percent last year, according to official preliminary estimates.
“Money is coming into Taiwan’s stocks as people are getting optimistic about the global economy,” said Albert Lee, a Taipei-based fixed-income trader at Cathay United Bank Co.
The Taiwan dollar strengthened 0.1 percent to NT$29.530 against its U.S. counterpart, according to Taipei Forex Inc. The currency touched NT$29.415 on Feb. 4, the strongest level in almost five months. It has advanced 2.6 percent this year.
The yield on the government’s 1 percent notes due January 2017 rose one basis point, or 0.01 percentage point, to 0.943 percent, prices from Gretai Securities Market show.
“There was money coming into Taiwan bonds to profit from the rapid currency rally,” Lee said. “But the room for the yields to go much lower is limited” after the rate reached the lowest level since November 2010 on Jan. 30, he said.
The yield on benchmark 30-year securities fell five basis points to 1.82 percent after the Ministry of Finance sold notes of that maturity at a lower-than-expected rate. The NT$35 billion ($1.2 billion) of notes yielded 1.823 percent, lower than the 1.865 percent traders predicted in a Bloomberg survey.
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.
--Editors: Ven Ram, 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
