Bloomberg News

Taiwan Dollar Forwards Rise to One-Week High on Growth Optimism

February 20, 2013

Taiwan dollar forwards advanced to the strongest level in a week after investors boosted holdings of the island’s stocks on optimism economic growth in the region is picking up. Government bonds declined.

Global funds bought $180 million more local shares than they sold in the last two days, taking net purchases this year to $1.8 billion, according to exchange data. Bank of Korea Governor Kim Choong Soo said in an interview yesterday that an improved global outlook increases the odds of the South Korean economy exceeding this year’s growth forecast.

“Asia’s economic growth has been bottoming out,” said Eric Hsing, a fixed-income trader at First Securities Inc. in Taipei. “Risk sentiment has been improving.”

One-month non-deliverable forwards strengthened 0.1 percent to NT$29.54 versus the dollar as of 4:14 p.m. local time, data compiled by Bloomberg show. They touched a one-week high of NT$29.495 earlier.

In the spot market, the currency advanced 0.3 percent to NT$29.6 against its U.S. counterpart, according to prices from Taipei Forex Inc. The central bank has sold the local currency near the close on most days in the past 10 months, according to traders who asked not to be identified.

The island’s economy expanded 3.4 percent last quarter from a year earlier, according to the median estimate in a Bloomberg survey before finalized official data due Feb. 22. Gross domestic product increased 0.98 percent in the preceding three months.

One-month implied volatility in the Taiwan dollar, a gauge of expected moves in the exchange rate used to price options, fell 13 basis points, or 0.13 percentage point, to 4.92 percent, according to data compiled by Bloomberg.

The yield on the 1.125 percent bonds due March 2023 added one basis point to 1.213 percent, according to Gretai Securities Market. The overnight interbank lending rate was steady at 0.385 percent, a weighted average compiled by the Taiwan Interbank Money Center showed.

To contact the reporter on this story: Andrea Wong in Taipei at awong268@bloomberg.net

To contact the editor responsible for this story: Amit Prakash at aprakash1@bloomberg.net


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