Taiwan Dollar Forwards Rise as China Manufacturing Tops Estimate

Taiwan dollar forwards gained as a report showing Chinese manufacturing improved by more than economists estimated brightened the island’s export outlook. Government bonds were little changed.

China’s Purchasing Managers’ Index was 51.7 in March, compared with the median estimate of 50.8 in a Bloomberg survey and 50.4 in February, according to a preliminary reading published by HSBC Holdings Plc and Markit Economics today. China is Taiwan’s biggest export market. In the five months since President Ma Ying-jeou cut taxes, the island’s tycoons have pledged $5.9 billion in local investment proposals, triple the amount in 2011, according to the Ministry of Economic Affairs.

“The PMI data shows a broad-based improvement including new orders, output and export orders, so it’s bullish sign,” said Jackit Wong, a regional economist in Hong Kong at Natixis Asia Ltd. “Taiwan stands to gain most by trade ties.”

Three-month non-deliverable forwards climbed 0.2 percent to NT$29.693 per dollar as of 10:40 a.m. in Hong Kong, according to data compiled by Bloomberg. The local dollar rose 0.2 percent to NT$29.789, according to Taipei Forex Inc.

Three-month implied volatility in the Taiwan dollar, a gauge of expected moves in the exchange rate used to price options, dropped six basis points, or 0.06 percentage point, to 3.73 percent, data compiled by Bloomberg show.

The yield on the 1.125 percent government bonds due March 2023 was steady at 1.31 percent, according to Gretai Securities Market. The overnight interbank lending rate was little changed at 0.388 percent, a weighted average compiled by the Taiwan Interbank Money Center shows.

To contact the reporter on this story: David Yong in Singapore at dyong@bloomberg.net

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

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