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Taiwan 10-Year Bond Yield Gains Most in Four Years: Taipei Mover

March 11 (Bloomberg) -- The yield on Taiwan’s benchmark 10-year bonds rose the most since January 2009 as an improving U.S. economy encourages risk-taking and damps demand for the relative safety of government debt. The currency touched a six-month low.

Stocks rallied across Asia and the Dollar Index approached a seven-month high after a report last week showed jobs in the U.S., Taiwan’s second-biggest overseas market, increased 236,000 in February, beating the 165,000 median estimate of economists in a Bloomberg survey. Global funds bought $29 million more Taiwanese shares than they sold today, taking 2013 net purchases to $2.1 billion, exchange data show.

The yield on the 1.125 percent bonds due March 2023 climbed 10 basis points, or 0.1 percentage point, to 1.378 percent as of 4:05 p.m. in Taipei, according to prices from Gretai Securities Market. It touched 1.38 percent, the highest level since October 2011.

“Fundamentals are improving in the U.S. and Taiwan,” said Sandy Liao, a fixed-income trader at Grand Cathay Securities Corp. in Taipei. “We’re seeing more signs of a long-term bearish trend for Taiwan bonds.”

The Taiwan dollar fell 0.1 percent to NT$29.74 against its U.S. counterpart, based on prices from Taipei Forex Inc. It touched NT$29.810 earlier, the weakest level since Sept. 10.

The central bank has sold the local currency near the close on most days in the past 11 months, according to traders who asked not to be identified.

One-month non-deliverable forwards were steady at NT$29.68 per dollar, according to data compiled by Bloomberg. Implied volatility, a measure of expected moves in the exchange rate over a month used to price options, advanced six basis points to 3.82 percent. The overnight interbank lending rate was little changed at 0.386 percent, according to the Taiwan Interbank Money Center.

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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