Taiwan Dollar Climbs to One-Week High on Fed Stimulus Comments

Taiwan’s dollar rose to a one-week high after Federal Reserve officials signaled support for maintaining record stimulus that’s buoyed emerging-market assets. Government bonds advanced.

New York Fed President William C. Dudley said yesterday that while he’s becoming “more hopeful” the U.S. economy is rebounding, monetary policy will remain accommodative for a period of time. That follows comments last week by Fed Chairman-nominee Janet Yellen, who said stimulus shouldn’t be removed as long as the recovery is fragile. Global funds bought $47 million more local stocks than they sold yesterday, after pulling $677 million last week, exchange data show.

“It seems pretty certain Yellen will be Fed Chairman and her comments indicate easing will continue,” said Samson Tu, a Taipei-based fund manager at Uni-President Assets Management Corp. “So the trend of money returning to the U.S. may reverse, though fund flows into emerging markets won’t be as strong as before.”

Taiwan’s dollar gained 0.4 percent to NT$29.471 against the greenback as of 10:12 a.m. local time, prices from Taipei Forex Inc. show. The currency touched NT$29.460 earlier, the strongest level since Nov. 11.

The local dollar lost 0.2 percent in the last minute of trading yesterday amid suspected central bank intervention. The monetary authority has sold the currency in the run-up to the close on most days since March 2012, according to traders who asked not to be identified.

Forwards, Bonds

The U.S. central bank will release minutes of the Federal Open Market Committee’s Oct. 29-30 meeting tomorrow, before a Nov. 21 Senate Banking Committee vote on Yellen’s nomination.

One-month non-deliverable forwards on the local dollar fell 0.1 percent to NT$29.404 per dollar, according to data compiled by Bloomberg. The contracts rose 0.4 percent yesterday, the most since Oct. 3.

Taiwan’s five-year government bonds advanced for a fifth day. The yield on the 1.25 percent notes due October 2018 fell one basis point, or 0.01 percentage point, to 1.117 percent, according to Gretai Securities Market.

One-month implied volatility, a gauge of expected moves in the exchange rate used to price options, decreased two basis points to 3.31 percent. The overnight interbank lending rate was steady at 0.388 percent, a weighted average compiled by the Taiwan Interbank Money Center showed.

To contact the reporter on this story: Justina Lee in Hong Kong at jlee1489@bloomberg.net

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

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