Taiwan Bonds Gain as Exports Miss Estimates; Currency Climbs

Taiwan’s five-year bonds snapped a two-day loss after export figures missed estimates, adding to concern the economy is slowing. The local dollar strengthened.

Overseas shipments, which account for more than 60 percent of the island’s gross domestic product, rose 1.6 percent in July from a year earlier, official data showed yesterday. That was less than the 4.9 percent increase forecast by economists in a Bloomberg survey and an 8.6 percent advance the previous month. Global funds sold $536 million more Taiwanese shares than they bought in the last three days, cutting net purchases this year to $2.3 billion, according to the stock exchange.

“The exports data wasn’t good and some traders are trying to push down yields,” said Sam Chang, a fixed-income trader at Yuanta Securities Co. in Taipei. “But the long-term trend of yields rising hasn’t changed.”

The yield on the 0.875 percent government notes due January 2018 fell one basis point to 1.116 percent as of 10:18 a.m. in Taipei, according to Gretai Securities Market.

Taiwanese bonds have lost 3.2 percent this year, the second-worst performance after Indonesia among 10 Asian debt indexes compiled by HSBC Holdings Plc. The government lowered its official growth forecast for this year to 2.4 percent in May from 3.59 percent previously.

The central bank will sell NT$10 billion ($334 million) of two-year negotiable certificates of deposit tomorrow, the first such offering since 2003.

Currency, Volatility

The Taiwan dollar strengthened 0.3 percent to NT$29.936 against its U.S. counterpart, Taipei Forex Inc. prices show. The currency was little changed four minutes before the 4 p.m. close yesterday and ended 0.1 percent weaker.

The central bank has sold the island’s dollar in the run-up to the close on most days in the past year, according to traders who asked not to be identified.

One-month non-deliverable forwards climbed 0.1 percent to NT$29.929 per dollar, according to data compiled by Bloomberg. One-month implied volatility, a gauge of expected moves in the exchange rate used to price options, was little changed at 3.44 percent.

The overnight interbank lending rate was steady at 0.385 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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