Taiwan Dollar Rises on Optimism Monetary Easing to Boost Exports

Taiwan’s dollar rose to the strongest level in almost two weeks on optimism central banks in the world’s biggest economies will ease monetary policy, helping support the island’s exports. Government bonds were steady.

The time is ripe for China’s central bank to lower lenders’ reserve ratios, China Securities Journal said today. The European Central Bank will cut its benchmark interest rate by at least a quarter of a percentage point at its July 5 meeting, according to 51 of 62 forecasts in a Bloomberg survey.

“A rate cut by the ECB would support a rally across Taiwan’s asset classes,” said Albert Lee, a Taipei-based fixed-income trader at Cathay United Bank Co. “But the effect may fizzle in a day or two. The ECB hasn’t been able to inject much concrete optimism into the market lately.”

The Taiwan dollar gained 0.1 percent to NT$29.886 against its U.S. counterpart, according to Taipei Forex Inc. It touched NT$29.780, the strongest level since June 21. One-month implied volatility, a measure of exchange-rate swings used to price options, was steady at 3.90 percent.

The yield on the 1.25 percent bonds due March 2022 was steady at 1.227 percent, according to Gretai Securities Market. The overnight interbank lending rate was unchanged at 0.506 percent, according to a weighted average compiled by the Taiwan Interbank Money Centre.

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