Taiwan Yields Slip From Five-Month High on Spain; Currency Gains

April 19 (Bloomberg) -- Taiwan’s five-year bond yields dropped from a five-month high as investors sought the perceived safety of government debt on concern Europe’s debt crisis will slow the global recovery. The local dollar strengthened.

Most Asian stock indexes dropped after Spanish banks reported a record amount of non-performing loans as a proportion of total lending in February. Export orders dropped 3.9 percent in March from a year earlier, following a 17.6 percent gain the previous month, according to the median estimate of economists surveyed by Bloomberg before data due tomorrow.

“Concern over Europe’s debt crisis is back,” said Eric Hsing, a fixed-income trader at First Securities Inc. in Taipei. “Investors are still worried about Taiwan’s economic outlook.”

The yield on the government’s 1 percent securities due January 2017 fell one basis point, or 0.01 percentage point, to 1.04 percent, according to Gretai Securities Market. Benchmark five-year rates touched 1.052 percent on April 17, the highest level since Nov. 4, and slipped to 1.051 percent yesterday.

Taiwan’s dollar strengthened 0.1 percent to NT$29.532 against its U.S. counterpart, according to Taipei Forex Inc. The central bank may allow faster rises in the overnight rate and the local dollar to tame inflation, the Commercial Times reported on April 17, citing an unidentified monetary authority official.

One-month implied volatility in the local dollar, a measure of exchange-rate swings traders use to price options, was steady at 3.70 percent. The overnight money-market was little changed at 0.487 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