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Taiwan Dollar Rises to 1-Week High on U.S. Stimulus Speculation

Taiwan’s dollar advanced to a one- week high as global investors poured funds into the island’s stocks, betting central banks in the U.S. and China will ease monetary policy to boost their economies.

Global funds bought $151 million more Taiwanese stocks than they sold today, taking net purchases this month to $3.1 billion, according to exchange data. Minutes of the U.S. Federal Reserve’s last meeting showed many members favored more stimulus unless the pace of the economic recovery picks up. People’s Bank of China Governor Zhou Xiaochuan said adjustments to interest rates and banks’ reserve requirements are still possible after the central bank stepped up temporary cash injections this month. Bonds were steady.

“Foreign funds and exporters are driving Taiwan dollar’s rise,” said Tarsicio Tong, a foreign-exchange trader at Union Bank of Taiwan. (2838) “Speculation the U.S. will do quantitative easing soon is back today.”

Taiwan’s dollar advanced 0.2 percent to NT$29.96 against its U.S. counterpart, according to Taipei Forex Inc. It touched NT$29.85 earlier, the strongest level since Aug. 15. One-month implied volatility, a measure of exchange-rate swings used to price options, dropped 10 basis points to 3.1 percent.

Industrial production fell 0.02 percent in July from a year earlier, a fifth monthly drop, official data showed today.

The yield on Taiwan’s 1.25 percent notes due March 2022 was steady at 1.184 percent, according to Gretai Securities Market.

The overnight money-market rate stood at 0.387 percent, according to a weighted average compiled by the Taiwan Interbank Money Centre.

To contact the reporter on this story: Andrea Wong in Taipei at awong268@bloomberg.net

To contact the editor responsible for this story: James Regan at jregan19@bloomberg.net

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