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Taiwan Dollar Forwards Fall on China Factory Data; Bonds Steady

Oct. 1 (Bloomberg) -- Taiwan dollar forwards weakened for the first time in three days on concern a pickup in the island’s growth is unlikely as a report showed Chinese factory output trailed economists’ forecasts. Government bonds were steady.

The Purchasing Managers’ Index in Asia’s largest economy was 49.8 in September, less than the median estimate of 50.1 in a Bloomberg News survey, official data showed today. Taiwan’s export orders dropped 1.5 percent in August from a year earlier, a sixth monthly decline, according to a Sept. 20 report.

“It looks like one of the world’s biggest growth engines is in trouble,” said Eric Hsing, a fixed-income trader at First Securities Inc. in Taipei. “Global economic growth might struggle to recover anytime soon.”

One-month non-deliverable forwards declined 0.1 percent to NT$29.315 as of 4:20 p.m. in Taipei, according to data compiled by Bloomberg. They traded at a 0.3 premium to the spot rate.

The Taiwan dollar weakened 0.2 percent to NT$29.402 against its U.S. counterpart, according to Taipei Forex Inc. It reached NT$29.198 on Sept. 17, the strongest level since May 3. One-month implied volatility, a measure of exchange-rate swings used to price options was unchanged at 3.71 percent.

The yield on Taiwan’s 1.125 percent bonds due September 2022 was 1.168 percent, compared with 1.169 percent on Sept. 28, according to Gretai Securities Market. The overnight money-market rate advanced one basis point, or 0.01 percentage point, to 0.391 percent, a weighted average compiled by the Taiwan Interbank Money Center shows.

To contact the reporter on this story: Andrea Wong in Taipei at awong268@bloomberg.net

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

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