Bloomberg News

Taiwan Dollar Gains After Funds Buy Local Stocks; Bonds Decline

March 09, 2012

Taiwan’s dollar advanced for a second straight day after international investors added to holdings of the island’s assets. Government bonds declined.

Global funds bought $83 million more Taiwanese shares than they sold today, exchange data showed. Stock indexes jumped across Asia after private investors agreed to swap about 96 percent of their Greek government bonds for new securities, according to a banker briefed on the results.

“Risk-taking sentiment prevails today after the good news on Greece,” said Eric Hsing, a fixed-income trader at First Securities Inc. in Taipei.

The Taiwan dollar gained 0.1 percent to NT$29.504 against its U.S. counterpart, according to Taipei Forex Inc. The currency weakened 0.2 percent this week. One-month implied volatility, a measure of price swings that options traders use, dropped six basis points to 4.64 percent today.

The yield on the government’s 1.25 percent bonds due March 2022 rose one basis point to 1.264 percent, prices from Gretai Securities Market showed. The rate was little changed this week.

“The movement in yields will be limited as the central bank may keep interest rates unchanged for the rest of the year.”

The central bank, which next reviews monetary policy on March 22, left its benchmark rate at 1.875 percent on Dec. 29.

The overnight money-market rate was little changed today and from last week at 0.399 percent, according to a weighted average compiled by the Taiwan Interbank Money Center.

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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