Bloomberg News

Taiwan Dollar Completes Fourth Weekly Decline on Stock Sell-Off

March 22, 2013

Taiwan’s dollar completed its fourth weekly decline as overseas investors pulled the most money from stocks in 10 months on concern the island’s economic recovery is slowing. Government bonds advanced.

Global funds sold $1.2 billion more shares than they bought this week, the most since the period ending May 12, according to exchange data. Export orders slumped 14.5 percent last month from a year earlier, more than the 3 percent drop economists surveyed by Bloomberg estimated, official data showed March 20. Industrial production slowed for the first time since June, another Bloomberg survey showed before a report due March 25.

“Sentiment has been pretty bad this week,” said Eric Hsing, a fixed-income trader at First Securities Inc. in Taipei. “Concern about Taiwan’s economic recovery has been reignited.”

The local dollar fell 0.5 percent this week to NT$29.909 against its U.S. counterpart, the weakest level since Sept. 7, according to Taipei Forex Inc. It slipped 0.2 percent today and was little changed one minute before the market close.

The central bank has sold the local currency in the run-up to the close on most days in the past year, according to traders who asked not to be identified.

One-month non-deliverable forwards dropped 0.6 percent this week and 0.3 percent today to NT$29.885, according to data compiled by Bloomberg.

One-month implied volatility, a gauge of expected moves in the exchange rate used to price options, gained 38 basis points to 3.71 percent from the end of last week, data compiled by Bloomberg show. It rose 22 basis points, or 0.22 percentage point, today.

The yield on the 1.125 percent government bonds due March 2023 fell two basis points today and this week to 1.30 percent, according to Gretai Securities Market. The overnight interbank lending rate was little changed at 0.387 percent, a weighted average compiled by the Taiwan Interbank Money Center shows.

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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