Taiwan Dollar Hits 8-Month High on Power Prices; Bonds Steady

Taiwan’s dollar touched the strongest level in almost eight months as the Taiex index rallied after the government postponed an electricity-price increase. Government bonds were little changed.

Electricity-price gains will take effect on June 10, later than the originally scheduled May 15, and will be phased in over a period of more than six months, according to a statement posted by the island’s presidential office yesterday on its website. Official data showed last week that the local economy expanded for a 10th successive quarter in the three months through March.

“Although Taiwan’s economy is still recovering, it’s still in pretty good shape compared to the developed nations,” said Eric Hsing, a fixed-income trader at First Securities Inc. in Taipei. “Markets have been reflecting inflation concerns recently.”

Taiwan’s dollar was little changed at NT$29.24 versus its U.S. counterpart, according to Taipei Forex Inc. It touched NT$29.08, the strongest level since Sept. 8. One-month implied volatility, a measure of exchange-rate swings traders use to price options, .dropped nine basis points, or 0.09 percentage point, to 3.91 percent

The yield on the government’s 1 percent bonds due January 2017 was little changed at 1 percent, according to Gretai Securities Market.

The overnight interbank lending rate was little changed at 0.505 percent, according to a weighted average compiled by the Taiwan Interbank Money Center. It reached 0.508 percent on April 30, the highest level since 2008.

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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