Taiwan Dollar Forwards Touches One-Week High on China Recovery

Taiwan dollar forwards touched the strongest level in a week after data signaled China’s economic recovery is gathering pace, brightening the outlook for the island’s exports. Government bonds were steady.

Industrial production in Asia’s biggest economy climbed 10.1 percent in November from a year earlier and retail-sales growth accelerated to 14.9 percent, the statistics bureau said yesterday. Both figures topped economists’ estimates in separate Bloomberg surveys. Global funds bought $26.1 million more Taiwanese shares than they sold today, adding to last week’s net purchases of $897 million and boosting this year’s inflows to $4.2 billion, according to exchange data.

“It’s a modestly risk-on day in Asia today,” said Dariusz Kowalczyk, a Hong Kong-based strategist at Credit Agricole CIB. “China is the region’s main export destination, so improvement in China should boost sentiment.”

One-month non-deliverable forwards were little changed at NT$29.07 per dollar as of 4:03 p.m. in Taipei, according to data compiled by Bloomberg. They reached NT$29.00 earlier, the highest level since Dec. 3. The contracts are at a 0.3 percent premium to the spot rate, which slipped 0.1 percent to NT$29.15, based on Taipei Forex Inc. prices.

One-month implied volatility, a measure of expected moves in exchange rates used to price options, dropped two basis points basis points, or 0.02 percentage point, to 3 percent.

Taiwan’s exports rose 0.9 percent in November from a year earlier, after dropping in seven of the previous eight months, official data showed Dec. 7. That compares with the 7.8 percent growth economists forecast in a Bloomberg survey.

Bond Sales

Taiwan’s treasury administration forecast future government bond issuances will “frequently” exceed NT$610 billion ($21 billion), following NT$665 billion in 2012, according to two people invited to a Dec. 14 meeting between the authority, the central bank, and primary dealers.

The yield on the government’s 1.125 percent bonds due September 2022 was steady at 1.138 percent, according to Gretai Securities Market. The overnight interbank lending rate was little changed at 0.386 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

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