Bloomberg News

Taiwan Dollar Reaches One-Month High on U.S. Data; Bonds Steady

April 03, 2012

Taiwan’s dollar advanced to a one month-high as signs the U.S. economy is recovering spurred investor demand for riskier assets. Government bonds were steady.

The MSCI Asia-Pacific Index of shares rose for a third day after the U.S. Institute for Supply Management’s factory index climbed to 53.4 in March from 52.4 in February, according to data released yesterday. Global funds bought $5.1 billion more of the island’s stocks than they sold this year, helping drive a 2.7 percent gain in the local dollar. Consumer prices in Taiwan increased 1.32 percent in March from a year earlier, after a 0.25 percent gain in February, according to a Bloomberg survey before a report due April 5.

“The recovery in the U.S. is going better than expected,” said Eric Hsing, a fixed-income trader at First Securities Inc. in Taipei. “Soaring consumer prices remain a concern in Taiwan.”

Taiwan’s dollar advanced 0.1 percent to NT$29.48 against its U.S. counterpart, according to Taipei Forex Inc. It touched NT$29.360, the strongest level since March 2. One-month implied volatility, a measure of exchange-rate swings that traders use to price options, fell 26 basis points to 3.74 percent.

The central bank left the benchmark interest rate at 1.875 percent last month and said it will focus on inflation rather than boosting growth in 2012.

The yield on the government’s 1 percent bonds due January 2017 was little changed at 1.022 percent, according to Gretai Securities Market. The overnight money-market rate slipped one basis points, or 0.01 percentage point, to 0.424 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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