Bloomberg News

Taiwan’s Dollar Steady as Official Sees Inflation Within Target

May 10, 2012

Taiwan’s dollar and government bonds were little changed after the central bank signaled inflation will stay within target in 2012, following data this week showing prices rose the most in three months.

Governor Perng Fai-nan said yesterday he’s confident the consumer-price index will remain below 2 percent this year, after the statistics bureau raised its full-year forecast to 1.94 percent from 1.46 percent last month. The gauge climbed 1.44 percent in April, compared with a revised 1.25 percent increase in March.

“Inflation concern has eased,” said Tarsicio Tong, a foreign-exchange trader at Union Bank of Taiwan (2838) in Taipei. “The currency should stay in a range of between NT$29.2 and NT$29.5 as Taiwan’s economy isn’t great. There’s no basis supporting a strong appreciation.”

Taiwan’s dollar traded at NT$29.395 against its U.S. counterpart, compared with NT$29.400 yesterday, according to Taipei Forex Inc. One-month implied volatility, a measure of exchange-rate swings traders use to price options, was unchanged at 4.5 percent.

Exports declined 6.4 percent in April from a year earlier, after a 3.2 percent drop the previous month, official data showed this week. Economic growth slowed to 0.36 percent last quarter, the least since a contraction in the period ended September 2009.

The yield on the government’s 1 percent bonds due January 2017 rose 0.5 basis point to 0.982 percent, according to Gretai Securities Market. The overnight interbank lending rate was little changed at 0.509 percent, according to a weighted average compiled by the Taiwan Interbank Money Center. It reached 0.514 percent yesterday, the highest level since 2008.

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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