Taiwan Dollar Rises to 5-Month High on Stock Inflows; Bonds Fall

Taiwan’s dollar rose to a five-month high after overseas funds bought local stocks on optimism the island’s economy will prove resilient to a global slowdown. Government bonds fell.

Foreign investors bought $883 million more local stocks than they sold this week, taking net purchases this year to $2.9 billion, according to exchange data. Taiwan’s economy will expand 3.91 percent in 2012, the statistics bureau said last month, compared with an official preliminary estimate of 4 percent growth last year.

“The Taiwan dollar’s movements depends on hot-money inflows and outflows, and there’s been money coming into Taiwan,” said Tarsicio Tong, a currency trader at Union Bank of Taiwan in Taipei. “Asia’s economy is performing better than the rest of the world.”

The Taiwan dollar strengthened 0.1 percent to NT$29.495 against its U.S. counterpart, according to Taipei Forex Inc. It touched NT$29.410, the strongest level since Sept. 13, and has advanced 2.7 percent this year.

The yield on the government’s 1 percent notes due January 2017 rose one basis point, or 0.01 percentage point, to 0.953 percent, prices from Gretai Securities Market show. Taiwan sold NT$100 billion ($3.4 billion) of 364-day certificates of deposit today at 0.887 percent, according to the central bank.

Thirty-Year Yields

Thirty-year bonds gained after the Ministry of Finance auctioned notes of that maturity yesterday at a lower-than- expected yield. The rate on the 1.75 percent bonds due February 2042 fell one basis point, or 0.01 percentage point, to 1.83 percent.

The overnight money-market rate, which measures interbank funding availability, was little changed at 0.396 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: Sandy Hendry at shendry@bloomberg.net

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