Bloomberg News

Taiwan Dollar Rebounds as G7 Addresses Europe Crisis; Bonds Fall

June 06, 2012

Taiwan’s dollar rebounded from the lowest level in almost five months and bonds declined after the Group of Seven nations agreed to coordinate their response to Europe’s debt crisis.

Finance ministers and central bank governors from the G7 said they will work together to help Greece and Spain place their public finances on a sustainable footing after a conference call yesterday, Japanese Finance Minister Jun Azumi told reporters in Tokyo. Taiwan’s five-year yields advanced for a second day after official data yesterday showed consumer prices rose 1.74 percent from a year earlier in May, compared with an increase of 1.44 percent in April.

“There’s some optimism again that these countries will get their acts together and tackle the crisis,” said Eric Hsing, a bond trader at First Securities Inc. in Taipei. “There still continues to be worries about Taiwan’s rising consumer prices.”

Taiwan’s dollar strengthened 0.2 percent to NT$29.935 against its U.S. counterpart, according to Taipei Forex Inc. It touched NT$30.070 yesterday, the weakest level since Jan. 17. One-month implied volatility, a measure of exchange-rate swings traders use to price options, fell 16 basis points to 5.64 percent.

Exports slumped 5.3 percent in May from a year earlier, a third monthly contraction, analysts surveyed by Bloomberg estimated before official data due tomorrow.

The yield on the government’s 1 percent bonds due January 2017 rose one basis point, or 0.01 percentage point, to 0.94 percent, according to Gretai Securities Market. It reached 0.91 percent on June 4, the lowest level for benchmark five-year rates since October 2010.

The overnight interbank lending rate was little changed at 0.51 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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