Taiwan Dollar Strengthens, Bonds Drop as Spain Seeks Bailout

Taiwan’s dollar gained and government bonds fell as optimism European policy makers are willing to do what it takes to end the region’s debt crisis boosted sentiment toward riskier assets.

The currency rebounded from its longest weekly losing streak since 2008 after Spain asked euro-area governments over the weekend for as much as 100 billion euros ($126 billion) to help shore up its banking system. The Bloomberg-JPMorgan Asia Dollar Index rose after official data showed China’s exports grew 15.3 percent in May from a year earlier, more than twice the 7.1 percent median estimate of economists in a Bloomberg survey.

“Risk-taking sentiment prevails today on Spain’s bailout,” said Eric Hsing, a bond trader at First Securities Inc. in Taipei. “China’s rise in exports means there could be a pickup in global demand, but just a month of data doesn’t really say anything.”

Taiwan’s dollar gained 0.2 percent to NT$29.92 against its U.S. counterpart as of the close, according to Taipei Forex Inc. The currency concluded a fifth weekly drop on June 9, the longest stretch of losses since September 2008.

The currency’s one-month implied volatility, a measure of exchange-rate swings used to price options, was little changed at 5.4 percent.

The yield on the government’s 1.25 percent bonds due March 2022 rose two basis points, or 0.02 percentage point, to 1.19 percent, according to Gretai Securities Market.

The overnight interbank lending rate slipped one basis point to 0.51 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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