Taiwan Dollar Forwards Halt Two-Day Gain Before China GDP Data

Taiwan dollar forwards halted a two- day advance before China, the island’s largest export market, releases data that is forecast to show growth slowed for a seventh quarter. Government bonds were steady.

Asia’s largest economy expanded 7.4 percent in the three months through September from a year earlier, compared with a 7.6 percent gain in the previous quarter, according to a Bloomberg survey before a report due Oct. 18. European leaders will meet in Brussels later this week as Greece seeks fresh aid and Spain holds out on tapping a bailout.

“There’s caution ahead of the Chinese data,” said Saktiandi Supaat, head of foreign-exchange research at Malayan Banking Bhd. (MAY) in Singapore. “The European Union summit may add a little bit of volatility to currency markets.”

One-month non-deliverable forwards traded at NT$29.165 per dollar as of 5:44 p.m. in Taipei, compared with NT$29.170 on Oct. 12, according to data compiled by Bloomberg. The contracts reached NT$29.133 earlier, the strongest level since May 9, and are at a 0.6 percent premium to the spot rate.

The Taiwan dollar closed 0.1 percent stronger at NT$29.345 against its U.S. counterpart, data from Taipei Forex Inc. showed. It was up 0.4 percent three minutes before the close of trading and has appreciated 3.8 percent this year. The central bank has intervened to stem advances in the currency in late trading on most days in the past five months, according to traders who asked not to be identified.

One-month implied volatility, a measure of exchange-rate swings used to price options, rose eight basis points, or 0.08 percentage point, to 3.58 percent.

The yield on the 2 percent government bonds due July 2017 was 0.873 percent, compared with 0.875 percent at the end of last week, according to Gretai Securities Market. The overnight interbank lending rate was steady at 0.387 percent, a weighted average compiled by the Taiwan Interbank Money Centre shows.

To contact the reporter on this story: Lilian Karunungan in Singapore at lkarunungan@bloomberg.net

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