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Taiwan Dollar Forwards Drop From Six-Month High as Exports Fall

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Nov. 8 (Bloomberg) -- Taiwan dollar forwards declined and the local currency trimmed gains after the island reported exports unexpectedly fell last month.

Overseas sales declined 1.9 percent in October, after rising 10.4 percent in September, official data showed today. The median estimate in a Bloomberg survey was for a 2 percent gain. The forwards touched a six-month high earlier ahead of Chinese data due to be released tomorrow that is forecast to show factory output and retail sales accelerated in October. China is Taiwan’s largest export market.

“There are a lot of people thinking this currency is going to gain support from China because of the recovery,” said Craig Chan, head of Asia ex-Japan foreign-exchange strategy at Nomura Holdings Inc. in Singapore.

One-month non-deliverable forwards declined 0.1 percent to NT$29.070 versus the greenback as of 5:53 p.m. in Taipei, according to data compiled by Bloomberg. The contracts reached NT$29.010 earlier, the strongest level since May 9, and are at a 0.5 percent premium to the spot rate.

The Taiwan dollar closed little changed at NT$29.202 against its U.S. counterpart, according to data from Taipei Forex Inc. It was up as much as 0.3 percent earlier and touched NT$29.103, the strongest level since May 2. The currency has gained 2.4 percent since June 30. One-month implied volatility, a measure of exchange-rate swings used to price options, was unchanged at 3.6 percent.

The yield on the government’s 2 percent bonds due July 2017 held at 0.884 percent, according to Gretai Securities Market. The overnight interbank lending rate was little changed at 0.385 percent, a weighted average compiled by the Taiwan Interbank Money Center shows.

To contact the reporter on this story: Lilian Karunungan in Singapore at lkarunungan@bloomberg.net

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

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