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Taiwan Dollar Gains as Foreign Funds Buy Stocks Before U.S. Data

Aug. 14 (Bloomberg) -- Taiwan’s dollar rose for the first time in three days after foreign investors bought the island’s stocks ahead of a report that economists predict will show U.S. retail sales rebounded in July.

Global funds bought $151 million more local shares than they sold yesterday, taking net purchases this month to $1.8 billion, exchange data show. The Taiex index of equities rose 0.6 percent and touched the highest level since May. U.S. retail sales increased 0.3 percent last month, the first rise since March, according to a Bloomberg survey before official figures today, easing concern the recovery in the world’s largest economy is losing momentum.

“Foreign funds have been piling into Taiwanese stocks as they see attractive valuations,” said Tarsicio Tong, a foreign-exchange trader at Union Bank of Taiwan. The fund flows and improved sentiment are supporting the currency, he said.

Taiwan’s dollar strengthened 0.1 percent to close at NT$29.965 against its U.S. counterpart, according to Taipei Forex Inc. It touched NT$30.029 yesterday, the weakest level since Aug. 3. One-month implied volatility, a measure of exchange-rate swings used to price options, dropped seven basis points, or 0.07 percentage point, to 3.40 percent.

The yield on Taiwan’s 1.25 percent bonds due March 2022 was steady at 1.176 percent, according to Gretai Securities Market. The overnight money-market rate was little changed at 0.389 percent, according to a weighted average compiled by the Taiwan Interbank Money Centre.

To contact the reporter on this story: Fion Li in Hong Kong at fli59@bloomberg.net

To contact the editor responsible for this story: James Regan at jregan19@bloomberg.net

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