Taiwan Dollar Headed for Worst Month Since May on Stock Outflows

Taiwan’s dollar headed for the worst month since May as foreigners cut holdings of local stocks amid speculation the Federal Reserve is closer to paring stimulus that’s buoyed emerging-market assets.

Global funds sold $1 billion more Taiwanese shares than they bought in November through yesterday, exchange data show, after two months of net inflows. Minutes of the Fed’s Oct. 29-30 meeting released last week showed policy makers said the central bank’s monthly asset purchases may be reduced in the “coming months” as the world’s largest economy improves. Claims (INJCJC) for unemployment benefits fell in the last three weeks in the U.S., while jobs growth in October topped forecasts.

“Overall fund flows are moving toward Europe and the U.S. and there’s been no obvious shift back into Asia, so the entire trading range for the Taiwan dollar shifted” downward, said Andrew Tsai, a Taipei-based economist at KGI Securities. “At least the Taiwan dollar and the Korean won have held steadier than other emerging-market currencies.”

Taiwan’s dollar weakened 0.5 percent this month to NT$29.611 against the greenback as of 10:15 a.m. in Taipei, prices from Taipei Forex Inc. show. The won rose 0.1 percent in November while Indonesia’s rupiah slid 6 percent, Malaysia’s ringgit lost 2.3 percent and the Thai baht fell 3 percent.

Taiwan’s currency advanced 0.2 percent today, having slipped 0.3 percent in the last six minutes of trading yesterday amid suspected central bank intervention. The monetary authority has sold the local dollar in the run-up to the close on most days since March 2012, according to traders who asked not to be identified.

Volatility Rises

One-month implied volatility, a gauge of expected moves in the exchange rate used to price options, increased 11 basis points this month to 3.25 percent. The measure fell eight basis points today. One-month non-deliverable forwards on Taiwan’s currency fell 0.8 percent in November to NT$29.582 per dollar and rose 0.1 percent today, data compiled by Bloomberg show.

The yield on the 1.25 percent government bonds due October 2018 was little changed from Oct. 31 at 1.087 percent, according to Gretai Securities Market. The rate climbed one basis point today.

Taiwan will sell 10-year sovereign notes at a yield of 1.67 percent at an auction today, according to the median estimate of 11 fixed-income traders surveyed by Bloomberg.

The overnight interbank lending rate was steady this month and today at 0.388 percent, a weighted average compiled by the Taiwan Interbank Money Center showed.

The government will release revised third-quarter gross domestic product data and this year’s growth forecast today.

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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