Taiwan Dollar Completes Fifth Weekly Rally on Foreign Inflows

Taiwan’s dollar completed a fifth weekly gain, the longest winning streak in seven months, as monetary easing in the U.S. and Japan spurred demand for emerging-market assets.

Foreigners bought $800 million more Taiwanese shares than they sold this week, exchange data show. Governor Perng Fai-nan said he’ll maintain relative stability in the local dollar and step into the market in the event of abnormal fluctuations. The Federal Reserve announced last week open-ended buying of $40 billion of mortgage debt per month in a third round of quantitative easing. The Bank of Japan (8301) unexpectedly expanded its asset-purchase fund this week.

“Some exporters are selling the greenback now as they’re worried the gains may extend due to QE3,” said Tarsicio Tong, a foreign-exchange trader at Union Bank of Taiwan (2838) in Taipei. “But Perng has made it quite clear that he wants the currency to be stable. I think it might go back to pre-QE3 levels in a month.”

The Taiwan dollar rose 0.1 percent this week and 0.2 percent today to NT$29.45 against its U.S. counterpart, according to Taipei Forex Inc. The currency has gained 1.8 percent this month.

The currency was trading 0.6 percent stronger one minute before the end of the 4 p.m. close and trimmed gains on speculation the central bank intervened to check appreciation of the currency, according to two traders who asked not to be identified.

One-month non-deliverable forwards fell 0.2 percent to NT$29.33 against the greenback, trading at a 0.4 percent premium to the spot rate.

Orders from abroad for Taiwanese goods dropped 1.5 percent in August from a year earlier, declining for a sixth month, official data showed yesterday. The central bank left its benchmark interest rate at 1.875 percent yesterday, as predicted by 17 of 19 economists surveyed by Bloomberg.

The yield on Taiwan’s 1.125 percent notes due September 2022 slipped one basis point to 1.179 percent during the five- day period, according to Gretai Securities Market.

The overnight money-market rate held at 0.388 percent, a weighted average compiled by the Taiwan Interbank Money Center shows.

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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