The central bank held the benchmark interest rate at 1.875 percent on March 22, and said consumer prices will be a bigger issue than maintaining economic growth this year. Industrial production rebounded 8.4 percent last month from a year earlier, after a 16.8 percent slump in January, official data show.
“It’s possible the central bank may let the currency rise more to ease imported inflation later this year,” said Tarsicio Tong, a currency trader at Union Bank of Taiwan in Taipei.
Taiwan’s dollar strengthened 0.2 percent today and this week to NT$29.53 against its U.S. counterpart, according to Taipei Forex Inc. The currency has appreciated 2.6 percent this quarter, the most in a year. One-month implied volatility, a measure of exchange-rate swings that traders use to price options, was steady at 4 percent today and is down from 6.3 percent at the end of 2011.
A government report on April 5 may show the consumer-price index rose 1.2 percent in March from a year earlier, after a 0.25 percent increase the previous month, according to the median estimate in a Bloomberg News survey.
The yield on the government’s 1 percent bonds due January 2017 was steady at 0.996 percent today, compared with benchmark five-year yields of 0.987 percent on Dec. 30, according to Gretai Securities Market.
The overnight money-market rate was little changed at 0.414 percent, according to a weighted average compiled by the Taiwan Interbank Money Center. It was 0.405 percent at the end of 2011.
To contact the reporter on this story: Andrea Wong in Taipei at email@example.com