Taiwan Dollar, Bonds Complete Weekly Gains on Investor Inflows

Taiwan’s dollar and government bonds completed weekly gains as foreign funds increased holdings of the island’s assets on optimism the global economy is recovering.

The local dollar had the biggest five-day rally since January 2011 after overseas investors bought $1.1 billion more Taiwanese stocks than they sold this week, taking net purchases for the year to $2.1 billion, according to exchange data. Reports this week showed manufacturing in the U.S., China and Germany picked up in January, and the island’s jobless rate dropped to 4.22 percent in December from 4.32 percent the previous month.

“Buying interest on shorter bonds from foreign investors is pretty strong,” said Ivy Leung, a Taipei-based fixed-income trader at Polaris Securities Co. “The appreciation in the Taiwan dollar has contributed to a bond rally.”

The Taiwan dollar strengthened 1.5 percent this week to NT$29.545 against its U.S. counterpart, according to Taipei Forex Inc. The currency touched NT$29.420 earlier, the strongest level since Sept. 13. It was little changed today.

The yield on the government’s 1 percent notes due January 2017 dropped four basis points, or 0.04 percentage point, this week to 0.938 percent, prices from Gretai Securities Market show. The rate rose one basis point today.

The overnight money-market rate, which measures interbank funding availability, was little changed today at 0.4 percent, according to a weighted average compiled by the Taiwan Interbank Money Center. It fell one basis point this week.

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

To contact the editor responsible for this story: Sandy Hendry at shendry@bloomberg.net

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