Taiwan’s Dollar Strengthens for Second Day on Recovery Optimism

Taiwan’s dollar gained for a second day, trading near the strongest level in more than five months, before an official report tomorrow that’s forecast to show the island’s economy rebounded. Government bonds were steady.

Gross domestic product rose 1.5 percent in the third quarter from a year earlier, after contracting 0.18 percent in the previous three months, economists predicted in a Bloomberg survey. Export orders, an indication of demand for shipments in one to three months, rose 1.9 percent in September, the first increase since February, figures showed on Oct. 19.

“Taiwan’s economy probably started recovering in September,” said said Ma Tieying, an economist at DBS Group Holdings Ltd. in Singapore. “I expect a stable Taiwan dollar looking forward as exports just recovered. The central bank might want a more stable currency.”

Taiwan’s dollar rose 0.05 percent to NT$29.278 versus its U.S. counterpart, data from Taipei Forex Inc. showed. It touched NT$29.142 on Oct. 17, the strongest level since May 2.

One-month non-deliverable forwards climbed 0.1 percent to NT$29.19 per dollar, according to data compiled by Bloomberg.

One-month implied volatility, a measure of exchange-rate swings used to price options, declined 13 basis points, or 0.13 percentage point, to 3.51 percent.

The yield on the 1.125 percent notes due September 2022 was little changed at 1.14 percent in the secondary market, according to Gretai Securities Market.

The overnight interbank lending rate was steady at 0.386 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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