Bloomberg News

Taiwan’s Dollar Snaps Three-Day Decline on Signs of Recovery

February 24, 2012

Feb. 24 (Bloomberg) -- Taiwan’s dollar snapped a three-day decline on optimism an economic recovery in the U.S. will boost exports and spur growth on the island. Government bonds were steady.

The currency climbed 0.1 percent today to erase losses earlier in the week. A report yesterday showed jobless claims in the world’s largest economy held at a four-year low. Overseas investors bought $1.4 billion more in Taiwanese stocks than they sold this month through yesterday, exchange data show.

Taiwan’s currency may gain as the island’s “growth outlook appears brighter now,” Wai Ho Leong and Joey Chew, Singapore- based analysts at Barclays Capital, wrote in a research note. “The improvement in U.S. economic indicators is finally filtering down to Taiwan.”

The local dollar appreciated to NT$29.582 against its U.S. counterpart, from NT$29.596 yesterday, according to Taipei Forex Inc. The currency has appreciated 2.4 percent this year and Barclays said it may reach NT$27.50 in 12 months.

Asian currencies rose to a two-week high after Greece won a 130 billion euros ($174 billion) bailout on Feb. 21 and China cut banks’ reserve-requirement ratio by half a percentage point from today.

Taiwan’s economy grew 1.89 percent in the fourth quarter from a year earlier, the slowest pace in more than two years, the statistics bureau said on Feb. 22. The government cut its growth forecast for 2012 to 3.85 percent from 3.91 percent.

The yield on the government’s 1.25 percent bonds due March 2022 was steady at 1.278 percent versus 1.272 percent a week ago, prices from Gretai Securities Market show. The benchmark 10-year rate reached 1.260 percent on Feb. 16, the lowest closing level since Dec. 19.

The overnight money-market rate, which measures interbank funding availability, was little changed for the week at 0.406 percent, according to a weighted average compiled by the Taiwan Interbank Money Center.

--Editors: Anil Varma, James Regan

%TWD

To contact the reporter on this story: David Yong in Singapore at dyong@bloomberg.net.

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


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