Taiwan Dollar Forwards Near One-Week Low Ahead of Exports Data

Taiwan dollar forwards traded near a one-week low ahead of data this week that may show exports slowed in October.

Overseas shipments grew 2 percent last month from a year earlier, after rising 10.4 percent in September, the median estimate of economists in a Bloomberg News survey showed before a government report on Nov. 8. In the spot market, the Taiwan dollar rose as much as 0.3 percent on speculation exporters were repatriating overseas earnings, before erasing the day’s gains toward close of trading.

“The consensus on the exports data is not fantastic; it’s not supportive of a very strong currency,” said Suan Teck Kin, an economist in Singapore at United Overseas Bank Ltd. “Possibly you have exporters selling their dollars in the morning and then the central bank will step in during late afternoon to guide the currency back to where they think is a reasonable level.”

One-month non-deliverable forwards fell 0.1 percent to NT$29.228 as of 4:07 p.m. in Taipei, compared with NT$29.19 at the end of last week, according to data compiled by Bloomberg. The contracts reached NT$29.245 earlier, the lowest level since Oct. 30, and are at a 0.3 percent premium to the exchange rate.

In the spot market, the Taiwan dollar ended at NT$29.305 against its U.S. counterpart, compared with NT$29.30 on Nov. 2, data from Taipei Forex Inc. showed. The currency was up 0.2 percent two minutes before trading ended. One-month implied volatility, a measure of exchange-rate swings used to price options, rose three basis points, or 0.03 percentage point, to 3.42 percent.

Intervention Risk

Taiwan’s central bank has intervened to stem advances in the currency in the final minutes of trading on most days in the past five months, according to traders who asked not to be identified. Central banks intervene in currency markets by arranging purchases or sales of foreign exchange.

Inflation slowed for a second month in October, the statistics bureau said in Taipei today. Consumer prices rose 2.36 percent from a year earlier, after climbing 2.96 percent in September.

The yield on the government’s 2 percent bonds due July 2017 was little changed at 0.879 percent, according to Gretai Securities Market. The overnight interbank lending rate was steady at 0.384 percent, a weighted average compiled by the Taiwan Interbank Money Center shows.

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