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Taiwan Dollar Weakens for 3rd Week on Growth Concern; Bonds Gain

Nov. 18 (Bloomberg) -- Taiwan’s dollar weakened for a third consecutive week as global funds cut holdings of the island’s stocks on concern Asia’s economic growth will be choked by the European debt crisis. Government bonds gained.

Foreign investors sold $385 million more Taiwanese shares than they bought today, taking net sales for the month to $1 billion, according to exchange data. Benchmark 10-year bonds rallied as investors sought the relative safety of debt after Spanish securities sank, with yields rising to the highest since the euro was introduced.

“Bonds rose since there’re some demands from investors for safe assets,” said Ivy Leung, a Taipei-based fixed-income trader at Polaris Securities Co. “Yields will continue to be led by movements in stocks. Volumes have been low as traders are still cautious about the uncertainties surrounding Europe.”

Taiwan’s dollar weakened 0.2 percent today and during the week to NT$30.257 against its U.S. counterpart, according to Taipei Forex Inc. It touched NT$30.29 yesterday, the weakest level since Oct. 24.

The yield on Taiwan’s 1.25 percent bonds due September 2021, the most-traded government debts, declined two basis points to 1.321 percent, prices from Gretai Securities Market show. The rates slipped one basis point during the five-day period.

The overnight money-market rate, which measures interbank funding availability, was little changed at 0.398 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: Sandy Hendry at shendry@bloomberg.net

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