Bloomberg News

Taiwan Dollar Forwards Rise to Six-Month High as Obama Wins

November 07, 2012

Taiwan dollar forwards rose to a six- month high after U.S. President Barack Obama was re-elected, easing concern that monetary easing would end should challenger Mitt Romney win office.

Romney had said he wouldn’t reappoint Federal Reserve Chairman Ben S. Bernanke when his term expires in 2014 and had pledged to halt bond purchases that have increased inflows to emerging-markets assets. Foreign funds bought $113 million more Taiwanese stocks than they sold in the first two days of this week, exchange data show.

“It’s clearly negative for the dollar,” said Nizam Idris, head of Asian fixed-income and foreign-exchange strategy at Macquarie Bank Ltd. in Singapore. “Relative to Romney, Obama is willing to support Ben Bernanke’s easing policy. Asian currencies for now are appreciating against the dollar.”

One-month non-deliverable forwards rose 0.5 percent to NT$29.068 versus the greenback as of 4:55 p.m. in Taipei, according to data compiled by Bloomberg. The contracts reached NT$29.065 earlier, the strongest level since May 9, and are at a 0.5 percent premium to the exchange rate.

In the spot market, the Taiwan dollar appreciated 0.3 percent to NT$29.200 against its U.S. counterpart, data from Taipei Forex Inc. showed. One-month implied volatility, a measure of exchange-rate swings used to price options, increased one basis point, or 0.01 percentage point, to 3.59 percent.

The yield on the government’s 2 percent bonds due July 2017 was little changed at 0.884 percent, according to Gretai Securities Market. The overnight interbank lending rate was steady at 0.386 percent, a weighted average compiled by the Taiwan Interbank Money Center shows.

To contact the reporter on this story: Lilian Karunungan in Singapore at lkarunungan@bloomberg.net

To contact the editor responsible for this story: James Regan at jregan19@bloomberg.net.


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