Taiwan Dollar Advances on U.S. Manufacturing Data; Bonds Rise

Taiwan’s dollar strengthened as a report that showed U.S. manufacturing expanded more than economists’ forecast boosted demand for emerging-market assets. Government bonds gained.

The MSCI Asia Pacific Index (MXAP) of shares snapped a two-day loss after the Institute for Supply Management factory index rose to 51.5 last month from 49.6 in August, exceeding the most optimistic estimate in a Bloomberg survey. Global funds bought $123 million more of the island’s stocks than they sold today, taking net buying this year to $2.9 billion, exchange data show.

“The U.S. data was a confidence boost for the market today,” said Tarsicio Tong, a foreign-exchange trader at Union Bank of Taiwan (2838) in Taipei. “But on the local news front there isn’t much happening.”

The Taiwan dollar strengthened 0.1 percent to NT$29.385 against its U.S. counterpart, according to Taipei Forex Inc. It reached NT$29.198 on Sept. 17, the strongest level since May 3. The local dollar should stay between NT$29 and NT$29.50 for the rest of the year, Tong forecast.

One-month non-deliverable forwards were little changed at NT$29.295, a 0.3 percent premium to the spot rate, according to data compiled by Bloomberg. One-month implied volatility, a measure of exchange-rate swings used to price options, was steady at 3.71 percent.

Government bonds gained the most in more than a week. The yield on Taiwan’s 1.125 percent bonds due September 2022 dropped one basis point to 1.157 percent, the biggest decline since Sept. 20, according to Gretai Securities Market. The overnight money-market rate was steady at 0.389 percent, a weighted average compiled by the Taiwan Interbank Money Center shows.

-- With assistance from Argin Chang in Taipei. Editors: Andrew Janes, Amit Prakash

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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