Bloomberg News

Taiwan Dollar Halts Four-Day Drop as Exporters Sell Greenback

April 11, 2012

Taiwan’s dollar halted a four-day slide on speculation exporters converted income at more- favorable exchange rates. Government bonds were steady.

The currency lost 0.3 percent in the previous four days on concern policy makers will introduce a capital-gains tax on stock trades, curbing fund inflows. Today’s advance was limited by speculation the central bank will intervene to keep the currency stable, according to Tarsicio Tong, a trader at Union Bank of Taiwan.

Taiwan’s dollar strengthened as much as 0.2 percent to NT$29.515 against its U.S. counterpart before closing up 0.03 percent at NT$29.562, according to Taipei Forex Inc.

“Exporters are pleased to sell the U.S. dollar, albeit in no hurry to dump it,” said Taipei-based Tong. “The currency still remains range-bound with the bottom near NT$29.45 and the top at NT$29.60 as the central bank has been intervening in the market and would like to see the currency trading in this range.”

One-month implied volatility, a measure of exchange-rate swings that traders use to price options, was steady at 4 percent.

The finance ministry plans to submit a proposal to the cabinet to impose capital-gains tax on stock trades of local institutions and some individuals, the Taipei-based Commercial Times reported today, without saying where it got the information from.

The yield on the government’s 1 percent bonds due June 2017 was little changed at 1.02 percent, according to Gretai Securities Market.

The overnight money-market rate was steady at 0.451 percent, according to a weighted average compiled by the Taiwan Interbank Money Center.

To contact the reporter on this story: Kyoungwha Kim in Singapore at kkim19@bloomberg.net

To contact the editor responsible for this story: James Regan at jregan19@bloomberg.net.


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