Taiwan Dollar Forwards Snap Three-Day Drop on U.S. Jobs Data

Taiwan dollar forwards strengthened for the first time in four days on optimism an improvement in the U.S. economy will boost demand for the island’s exports.

U.S. nonfarm payrolls rose by 155,000 in December, more than the 152,000 forecast in a Bloomberg survey, official data showed Jan. 4. Taiwanese exports jumped 9 percent last month from a year earlier, following a 0.9 percent increase in November, the Ministry of Finance said today.

One-month non-deliverable forwards gained 0.2 percent to NT$28.97 per dollar as of 4:10 p.m. in Taipei, according to data compiled by Bloomberg. The contracts are at a 0.5 percent premium to the spot rate, which was little changed at NT$29.125, based on Taipei Forex Inc. prices.

“Looks like the U.S. economy is improving,” said Tarsicio Tong, a Taipei-based foreign-exchange trader at Union Bank of Taiwan. (2838) “The central bank will continue to maintain the stability of the Taiwan dollar.”

The monetary authority has bought the greenback to counter gains in the island’s currency on most days in the past nine months, according to traders who asked not to be identified. The central bank’s mandate is to keep relative exchange-rate stability and to intervene in the event of abnormal moves, Governor Perng Fai-Nan said Dec. 19.

Inflation Accelerates

One-month implied volatility in the Taiwan dollar, a gauge of expected moves in exchange rates used to price options, rose three basis points, or 0.03 percentage point, to 3.1 percent.

Taiwan’s consumer prices climbed 1.61 percent in December from a year earlier, more than 1.59 percent in November and 1.38 percent forecast in a Bloomberg survey, the statistics bureau said today.

The yield on the 1.125 percent bonds due September 2022 was steady at 1.171 percent, the highest since Sept. 24, according to Gretai Securities Market. The overnight interbank lending rate was little changed at 0.386 percent today, 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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