Taiwan Dollar Forwards Touch Two-Week High on ECB Bond-Buy Plan

Taiwan dollar forwards touched the strongest level in more than two weeks on optimism European Central Bank President Mario Draghi will announce details of a bond-buying plan to tame the region’s debt crisis.

Draghi’s proposal involves unlimited purchases of government debt, two central bank officials briefed on the plan said. South Korea’s Finance Ministry said today an economic slowdown and Europe’s debt crisis are hurting consumer and business sentiment, after paring its second-quarter growth estimate to 0.3 percent from 0.4 percent.

“Expectation for ECB action is running very high,” said Wee-Khoon Chong, a fixed-income strategist at Societe Generale SA in Hong Kong. “Export growth continues to weigh on Asia’s economies. The central banks’ focus is expected to be firmly on growth.”

One-month non-deliverable forwards climbed 0.1 percent to NT$29.810 per dollar, according to data compiled by Bloomberg. They touched NT$29.785 earlier, the highest since Aug. 22.

The Taiwan dollar was little changed at NT$29.902 against its U.S. counterpart, according to Taipei Forex Inc. It reached NT$29.801 earlier, the strongest level since July 6, One-month implied volatility in the currency, a measure of exchange-rate swings used to price options, held at 3.6 percent.

Investors are also waiting for U.S. jobs data due tomorrow. Payrolls grew at a weaker pace in August and unemployment exceeded 8 percent for a 43rd month, economists forecast before the Labor Department report. Federal Reserve Chairman Ben S. Bernanke said at Jackson Hole, Wyoming, last week that he wouldn’t rule out more stimulus to revive growth.

Government bonds were steady. The yield on Taiwan’s 1.125 percent notes due September 2022 was little changed at 1.165 percent, according to Gretai Securities Market. The overnight money-market rate held at 0.39 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: James Regan at jregan19@bloomberg.net

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.