Bloomberg News

Taiwan’s Bonds Rise as Electricity-Price Increase Delayed

May 03, 2012

Taiwan’s government bonds rose, pushing benchmark five-year yields to the lowest level since March, after the government postponed an electricity-price increase. The local dollar weakened.

Electricity prices will climb from June 10, later than the originally scheduled May 15, and changes will be phased in over a period of more than six months, according to a statement posted by the island’s presidential office on May 1. Official data will show on May 7 Taiwan’s consumer prices rose 1.3 percent in April from a year earlier, after a 1.21 percent increase the previous month, according to the median estimate of economists in a Bloomberg survey.

“It looks like inflation pressure has eased a bit,” said Albert Lee, a Taipei-based fixed-income trader at Cathay United Bank Co. “That’s why we’re seeing falls in short-term yields.”

The yield on the government’s 1 percent bonds due January 2017 fell two basis points, or 0.02 percentage point, to 0.98 percent, the lowest level since March 14, according to Gretai Securities Market.

Taiwan’s dollar dropped 0.1 percent to NT$29.27 against its U.S. counterpart, according to Taipei Forex Inc. The currency touched NT$29.08 yesterday, the strongest level since Sept. 8.

One-month implied volatility, a measure of exchange-rate swings traders use to price options, rose 15 basis points to 4.15 percent.

The overnight interbank lending rate was little changed at 0.505 percent, according to a weighted average compiled by the Taiwan Interbank Money Center. It reached 0.509 percent yesterday, the highest level since 2008.

To contact the reporter on this story: Andrea Wong in Taipei at

To contact the editor responsible for this story: Sandy Hendry at

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