Bloomberg News

Taiwan Bonds Little Changed as Central Bank Set to Hold Rates

June 21, 2012

Taiwan’s government bonds were little changed before the central bank meets today, with analysts predicting policy makers will leave borrowing costs unchanged. The currency weakened.

The benchmark discount rate will stay at 1.875 percent, all 15 economists surveyed by Bloomberg News predicted. Taiwan is also due to sell NT$40 billion ($1.3 billion) of 10-year notes tomorrow, when it’s set to announce the auction schedule for the third quarter.

“Traders are waiting for the central bank’s call on rates,” said James Wang, a debt trader at Yuanta Securities Co. in Taipei. “We’re in a wait-and-see mode” before the bond sale and the pipeline announcement, he said.

The yield on the 1.25 percent securities maturing in March 2022 was at 1.188 percent at the close in Taipei, compared with 1.192 percent yesterday, according to Gretai Securities Market.

Taiwan plans to sell fewer bonds in 2013 than this year, Finance Minister Chang Sheng-ford said yesterday, declining to give an estimate. Wang said issuance may be similar to 2012 because of redemptions in 2013.

Taiwan’s dollar weakened 0.1 percent to NT$29.902 against its U.S. counterpart, according to Taipei Forex Inc. One-month implied volatility, a measure of exchange-rate swings used to price options, dropped 25 basis points to 4.65 percent.

The overnight interbank lending rate was steady at 0.511 percent, according to a weighted average compiled by the Taiwan Interbank Money Centre.

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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