Bloomberg News

Taiwan Dollar Touches Two-Week High as Easing May Boost Exports

July 04, 2012

Taiwan’s dollar rose to the strongest level in almost two weeks on speculation developed economies will ease monetary policy, improving the island’s export outlook. Government bonds declined.

The European Central Bank will cut its benchmark interest rate tomorrow, according to 50 of 62 forecasts in a Bloomberg survey. Taiwan’s overseas sales rose in June for the first time since February, according to the median estimate of economists surveyed by Bloomberg before official data due July 9. The Taiex index (TWSE) of shares reached the highest level in almost two months.

“Stocks have been at a relatively high level, supporting risk-taking,” said George Pu, a bond trader at Sinopac Securities Corp. in Taipei. “Yields may have a little room to go up in the short run.”

The Taiwan dollar advanced 0.1 percent to NT$29.866 against its U.S. counterpart, according to Taipei Forex Inc. It touched NT$29.760, the strongest level since June 21. One-month implied volatility, a measure of exchange-rate swings used to price options, dropped 10 basis points to 3.8 percent.

Further monetary-policy easing may be needed by the Federal Reserve if the U.S. economy deteriorates, International Monetary Fund Managing Director Christine Lagarde said yesterday.

The yield on the 1.25 percent bonds due March 2022 was 1.232 percent, compared with 1.227 percent yesterday, according to Gretai Securities Market. The overnight interbank lending rate was little changed at 0.507 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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