Bloomberg News

Taiwan Dollar Touches One-Week High on Europe Debt-Deal Optimism

July 02, 2012

Taiwan’s dollar touched the strongest level in a week after European leaders agreed on measures to tackle the region’s debt crisis. Government bonds were steady.

The Taiex (TWSE) index of shares rose for a second day after euro- area officials dropped requirements that taxpayers get preferred creditor status on aid to Spain’s banks and relaxed conditions on potential help for Italy. The gauge has plunged more than 10 percent since reaching a 2012 high on March 2. Foreign funds sold $271 million more of the island’s shares than they bought last week, exchange data show.

“Stocks were slightly up today, reflecting on the progress in Europe last week,” said James Wang, a debt trader at Yuanta Securities Co. in Taipei. “But you can see the Taiex is still pretty much in dead water and that’s going to continue to support bonds.”

The currency was little changed at NT$29.905 against its U.S. counterpart at the close after reaching a one-week high of NT$29.80, according to Taipei Forex Inc. One-month implied volatility, a measure of exchange-rate swings used to price options, was steady at 3.90 percent.

Taiwan’s export orders declined for a third month in May and the jobless rate climbed, official data showed last month.

The yield on the 1.25 percent bonds due March 2022 was 1.227 percent, compared with 1.229 percent on June 29, according to Gretai Securities Market. The overnight interbank lending rate was steady at 0.506 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: James Regan at jregan19@bloomberg.net.


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