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Taiwan 10-Year Yield Rises to 14-Month High as U.S. Improves

March 10, 2013

Taiwan’s government bonds fell for a fifth day, driving the 10-year yield to the highest level in 14 months, on optimism demand for the island’s exports will improve as the U.S. economy recovers.

Stocks rallied across Asia and the Dollar Index (DXY) approached its highest in seven months after a report last week showed jobs in the U.S., Taiwan’s second-biggest overseas market, increased 236,000 in February, beating the median 165,000 estimate of economists in a Bloomberg survey. Global funds bought $163 million more Taiwanese shares than they sold in the five days through March 8, bringing net purchases for the year to $2.1 billion, according to exchange data.

The yield on the 1.125 percent notes due March 2023 climbed three basis points, or 0.03 percentage point, to 1.308 percent as of 9:58 a.m. in Taipei, the highest level since Jan. 5, 2012, according to prices from Gretai Securities Market.

“Yields continue to rise after the good jobs data in the U.S.” but we’re seeing orders to buy the bonds at 1.3 percent, said Albert Lee, a fixed-income trader in Taipei at Cathay United Bank Co. “A consistent strengthening of the U.S. dollar might lead to money shifting out of Taiwan bonds into investment-grade dollar debt in the long run.”

Currency Weakens

The Taiwan dollar rose 0.1 percent to NT$29.704 against its U.S. counterpart, based on prices from Taipei Forex Inc. It touched NT$29.810 earlier, the weakest level in six months.

The central bank has sold the local currency near the close on most days in the past 11 months, according to traders who asked not to be identified.

One-month non-deliverable forwards in the Taiwanese currency weakened 0.1 percent to NT$29.698 per dollar, according to data compiled by Bloomberg. Implied volatility, a measure of expected moves in the exchange rate over a month used to price options, advanced 10 basis points to 3.86 percent.

The overnight interbank lending rate was little changed at 0.388 percent, according to the Taiwan Interbank Money Center.

To contact the reporter on this story: Andrea Wong in Taipei at

To contact the editor responsible for this story: James Regan at

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