Taiwan Dollar Forwards Steady as Stocks Rebound After Outflows

Taiwan dollar forwards were little changed as the island’s stocks rose the first time in four days, rebounding after overseas investors cut their holdings of the securities. Government bonds were also steady.

Global funds sold $12.4 million more Taiwanese stocks than they bought today, after net sales of $200 million or more on each of the last three trading days, exchange data show. The Dollar Index rose for a second day while the MSCI Asia Pacific Index advanced for the first time in three days. Taiwan’s exports expanded 9 percent from a year earlier in December, following a 0.9 percent gain in November, data showed Jan. 7.

“Sentiment is a bit risk-off; there’s been demand for the greenback,” said Albert Lee, a fixed-income trader in Taipei at Cathay United Bank Co. “It’s still too early to tell whether Taiwan’s economy has fully recovered.”

One-month non-deliverable forwards were little changed at NT$28.98 per dollar as of 4:11 p.m. in Taipei, having fluctuated a maximum 0.1 percent either side of yesterday’s close, according to data compiled by Bloomberg. The contracts are at a 0.4 percent premium to the spot rate, which climbed 0.06 percent to NT$29.11, based on Taipei Forex Inc. prices.

The monetary authority has bought the greenback to counter appreciation in the island’s currency during the final minutes of trading 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.

One-month implied volatility in the Taiwan dollar, a gauge of expected moves in exchange rates used to price options, climbed five basis points, or 0.05 percentage point, to 3.03 percent.

The yield on the 1.125 percent bonds due September 2022 was 1.169 percent, little changed from 1.17 percent yesterday, 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 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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