Taiwan Dollar Rebounds From Three-Month Low on Exporter Demand

Taiwan’s dollar rebounded from a three-month low on speculation exporters took advantage of a relatively favorable exchange rate to repatriate income. Government bonds dropped.

The U.S. dollar’s 14-day relative-strength index against the local currency reached 67 yesterday, approaching the threshold of 70 that signals the greenback will probably reverse gains. Global funds bought $23.1 million more Taiwanese stocks than they sold today, after eight days of net sales, according to exchange data.

Taiwan’s dollar strengthened 0.3 percent to NT$29.56 against its U.S. counterpart, according to Taipei Forex Inc. It touched NT$29.640 earlier, the weakest level since Feb. 2.

“Exporters’ money is countering massive outflows from foreign investors,” said Tarsicio Tong, a foreign-exchange trader at Union Bank of Taiwan (2838) in Taipei. “The NT$29.6 level is good for exporters to sell the greenback.”

One-month implied volatility for the currency, a measure of exchange-rate swings traders use to price options, dropped 14 basis points to 5.59 percent. It touched a four-month high of 5.88 percent yesterday.

The Taiex index of shares rallied after the Federal Reserve said slowing economic growth in the U.S. could warrant additional stimulus measures.

Taiwan will report on May 21 that export orders increased 0.5 percent in April from a year earlier after a 1.58 percent contraction the previous month, according to the median estimate of economists in a Bloomberg News survey.

The yield on the 1 percent government bonds due January 2017 rose to 0.965 percent from 0.961 percent yesterday, according to Gretai Securities Market. The overnight interbank lending rate was little changed at 0.508 percent, according to a weighted average compiled by the Taiwan Interbank Money Center. It closed at 0.514 percent on three consecutive days to May 11, 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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