Bloomberg News

Taiwan Dollar Strengthens on Stock Inflows; Bonds Little Changed

March 25, 2012

Taiwan’s dollar strengthened after foreign investors added to holdings of the island’s stocks on optimism the economy is proving resilient to the global slowdown. Government bonds were steady.

Global funds bought $223 million more local shares than they sold last week, taking net purchases this year to $5 billion, according to exchange data. Export orders rose 17.6 percent in February, the most since 2010, official data showed last week. The government plans to sell NT$185 billion ($6.3 billion) of bonds in the second quarter, less than the NT$225 billion it sold in the first three months of the year, the finance ministry announced March 23.

“Foreign funds are still interested in Taiwanese stocks,” said Stanford Chen, a Taipei-based fixed-income manager at KGI Securities Co. “Traders were expecting one less bond sale next quarter, so the sale schedule didn’t really come as a big surprise.”

Taiwan’s dollar traded at NT$29.575 against its U.S. counterpart as of 10 a.m. local time, compared with NT$29.585 on March 23, according to Taipei Forex Inc. One-month implied volatility, a measure of exchange-rate swings that traders use to price options, dropped 33 basis points, or 0.33 percentage point, to 4.20 percent, the lowest since September 2010.

The yield on the government’s 1.25 percent bonds due March 2022 was little changed at 1.282 percent, according to Gretai Securities Market. The overnight money-market rate was steady at 0.395 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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