Bloomberg News

Taiwan Dollar, Bonds Little Changed on Intervention Speculation

April 09, 2012

Taiwan’s dollar was little changed, after two days of losses, on speculation the central bank will seek currency gains to contain inflation. Bonds were steady.

Consumer prices climbed 1.21 percent in March from a year earlier, faster than a revised 0.23 percent increase in February, data showed on April 5. Exports fell 3.2 percent last month from a year earlier, after rising 10 percent in the preceding period, the Ministry of Finance reported in Taipei today. The median estimate of economists in a Bloomberg News survey was a 4.5 percent drop.

“Maybe the central bank will use the Taiwan dollar’s appreciation to curb inflation,” said Albert Lee, a Taipei- based fixed-income trader at Cathay United Bank Co.

Taiwan’s dollar was at NT$29.568 against its U.S. counterpart, compared with NT$29.562 at the end of last week, according to Taipei Forex Inc. The currency has rallied 2.4 percent this year. One-month implied volatility, a measure of price swings that options traders use, increased 10 basis points, or 0.1 percentage point, to 4 percent.

Central bank Governor Perng Fai-nan, who has highlighted the risk of costlier oil hurting domestic spending and exports, said on March 22 the monetary authority will monitor consumer prices closely.

Overseas investors sold $251 million more Taiwan stocks than they bought today, according to exchange data, taking this month’s net sales to $809 million amid concern policy makers will impose a capital-gains tax on stock trades. A government panel will formulate a proposal for such a levy this week, Deputy Finance Minister Hwang Ding-Fang said today.

The yield on the 1.25 percent bonds due March 2022 was little changed at 1.28 percent, according to Gretai Securities Market. The overnight money-market increased one basis point, or 0.01 percentage point, to 0.45 percent, according to a weighted average compiled by the Taiwan Interbank Money Center.

To contact the reporter on this story: Lilian Karunungan in Singapore at lkarunungan@bloomberg.net

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


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