Taiwan Dollar Touches Six-Month Low on Outflows, Stock Declines

Taiwan’s dollar fell to a six-month low on speculation a slide in Asian equities will prompt global investors to pull funds from the region.

The Bloomberg-JPMorgan Asia Dollar Index dropped 0.2 percent today, the most in more than two weeks, as the MSCI Asia Pacific Index of shares headed for its biggest loss since Dec. 12. The Taiex index of Taiwanese stocks has retreated 1.4 percent since closing at a two-year high on Dec. 30. Overseas investors sold $36.3 million more Taiwanese shares than they bought today, exchange data show.

“There might have been some fund outflows today as Asian currencies have mostly depreciated against the greenback,” said Tarsicio Tong, a Taipei-based currency trader at Union Bank of Taiwan. “There might be some profit-taking from the stock market as Taiwanese equities seem to have hit a peak” and other Asian stock indexes also fell, he said.

Taiwan’s dollar lost 0.7 percent today to NT$30.235 against the greenback, prices from Taipei Forex Inc. show. It earlier touched NT$30.301, the weakest level since July 9, 2013.

One-month non-deliverable forwards fell 0.3 percent to NT$30.053 per U.S. dollar, according to data compiled by Bloomberg. They touched NT$30.054 earlier, the weakest level since Aug. 2, 2013.

A gauge of China’s services industries fell to 50.9 in December from 52.5 the previous month, a report by HSBC Holdings Plc and Markit Economics showed today. The Nikkei 225 Stock Average posted its biggest drop since October today while the Hang Seng Index sank to a two-month low.

Volatility, Bonds

One-month implied volatility in Taiwan’s dollar, a gauge of expected moves in the exchange rate used to price options, jumped 33 basis points, or 0.33 percentage point, to 3.85 percent. It earlier rose to 3.89 percent, the highest since Oct. 11, 2013.

The yield on the 1 percent government bonds due January 2019 was little changed at 1.1350 percent in when-issued trading, according to Gretai Securities Market. The notes will be auctioned on Jan. 15.

Taiwan’s consumer prices climbed 0.33 percent in December, official data showed today, compared with the 0.8 percent median estimate in a Bloomberg survey of economists and 0.67 percent in the previous month.

The overnight interbank lending rate was little changed at 0.387 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: Amit Prakash at aprakash1@bloomberg.net

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