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Taiwan Dollar Reaches One-Week High After German Euro Pledge

May 22 (Bloomberg) -- Taiwan’s dollar strengthened to a one-week high as a pledge by Germany not to let Greece leave the euro reduced concern Europe’s debt crisis will worsen. Government bonds dropped.

European leaders will do “everything necessary” to keep Greece in the single currency, German Finance Minister Wolfgang Schaeuble said yesterday. Taiwan’s economics ministry said yesterday it will expand a low-interest rate loan program to improve exporters’ cash supply after official data showed orders for overseas sales fell 3.5 percent in April from a year earlier, following a 1.6 percent decline in March.

“Market optimism should be temporary as there continues to be worries Greece will exit the euro,” said Eric Hsing, a fixed-income trader at First Securities Inc. in Taipei. “It’s difficult for the Taiwan dollar to strengthen much under such global economic conditions.”

Taiwan’s dollar gained 0.1 percent to NT$29.546 against its U.S. counterpart as of the close, according to Taipei Forex Inc. It touched NT$29.460, the strongest level since May 15. The currency’s one-month implied volatility, a measure of exchange-rate swings traders use to price options, fell 40 basis points to 5.3 percent.

Global funds sold $3 billion more Taiwanese stocks than they bought this month, paring net purchases for 2012 to $952 million, according to exchange data.

The yield on the government’s 1 percent notes due January 2017 rose one basis point, or 0.01 percentage point, to 0.967 percent, according to Gretai Securities Market. The overnight interbank lending rate was little changed at 0.509 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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