Bloomberg News

Taiwan Dollar Climbs for Fourth Day on Stock Inflows; Bonds Gain

April 29, 2013

Taiwan’s dollar rose for a fourth day, the longest winning streak since October, after overseas investors boosted their holdings of the island’s shares last week by the most in more than two months.

The currency climbed to a two-month high after exchange data showed global funds bought $576 million more Taiwanese equities than they sold in the five days ended April 26, the biggest net purchases since the period ended Feb. 9. The government’s five-year bonds rose, pushing their yield to a three-month low, before data tomorrow that is forecast to show Taiwan’s economic growth slowed in the first quarter.

“Exporters selling the greenback and foreign inflows are driving gains in the Taiwan dollar for the time being,” said Tarsicio Tong, a currency trader at Union Bank of Taiwan in Taipei. “We’re watching tomorrow’s GDP numbers. The economic environment isn’t warranting a prolonged appreciation.”

The Taiwan dollar advanced 0.5 percent to NT$29.558 against its U.S. counterpart as of 11:50 a.m. local time, Taipei Forex Inc. prices show. The currency touched NT$29.55, the strongest level since Feb. 21.

The currency was trading 0.3 percent higher two minutes before the close on April 26, before ending the session 0.2 percent stronger that the previous day. The central bank has sold the local dollar in the run-up to the close on most days in the past year, according to traders who asked not to be identified.

Yen Rebound

A rebound in the yen is also supporting the local dollar’s advance, Tong said. The Japanese currency has strengthened 2.5 percent to 97.5 versus the greenback since reaching a four-year low of 99.95 on April 11. Manufacturers in Taiwan and Japan compete in the global market for electronics.

One-month non-deliverable forwards for the Taiwan dollar were little changed today at NT$29.522 per U.S. dollar, after a 0.8 percent advance last week that marked the biggest gain since November, according to data compiled by Bloomberg. One-month implied volatility, a gauge of expected moves in the exchange rate used to price options, rose nine basis points, or 0.09 percentage point, to 3.43 percent.

The yield on the 0.875 percent bonds due January 2018 fell one basis point to 0.895 percent, according to Gretai Securities Market prices. It reached 0.891 percent earlier, the lowest level since Jan. 25.

Taiwan’s gross domestic product rose 3.1 percent in the first quarter from a year earlier, slowing from a 3.72 percent gain in the previous three months, according to the median estimate of economists in a Bloomberg survey before a report tomorrow.

“Yields are approaching the lowest levels this year as investors are worried about growth prospects in Taiwan and beyond,” said Sam Chang, a fixed-income trader at Yuanta Securities Co. in Taipei. “The next psychological level would be the 2013 low of 0.88 percent, but it’s worth noting that there’s considerable noise of profit-taking in the market.”

The overnight interbank lending rate was steady at 0.388 percent, according to a weighted average compiled by the Taiwan Interbank Money Center.

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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