Taiwan Dollar Completes Third Monthly Advance on Stock Purchases

Taiwan’s dollar gained, completing a third monthly advance, as global funds added to holdings of the island’s shares on speculation economic growth in Asia will outpace the U.S. and Europe this year.

The local currency rose by the most in four weeks today as equity indexes rallied across Asia after Japan reported factory output rose 2 percent in January from the previous month, compared with the 1.5 percent median estimate in a Bloomberg News survey. Foreign investors bought $2.1 billion more Taiwanese stocks than they sold this month, bringing net purchases for 2012 to $4 billion, according to exchange data. Markets in Taiwan were closed for the last two days.

“Risk-taking appetite is quite strong,” said James Wang,” a fixed-income trader at Yuanta Securities Co. in Taipei. “If stock performances continue to stay strong, there’s a possibility bond yields will rise.”

The Taiwan dollar strengthened 0.6 percent to NT$ 29.420 against its U.S. counterpart from the end of last week, the most since Jan. 31, according to Taipei Forex Inc. The currency climbed 0.7 percent in February.

Asia’s emerging-market economies will expand 7.3 percent in 2012, compared with 1.2 percent for advanced nations, the International Monetary Fund predicted on Jan. 24. Euro-area countries will contract 0.5 percent, while the U.S. will expand 1.8 percent, according to the Washington-based lender.

The yield on the government’s 1.25 percent bonds due in March 2022 was little changed at 1.278 percent, prices from Gretai Securities Market show.

The overnight money-market rate, which measures interbank funding availability, dropped one basis point to 0.398 percent, according to a weighted average compiled by the Taiwan Interbank Money Center. The rate also slipped one basis point, or 0.01 percentage point, for the month.

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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