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Taiwan Dollar Strengthens to Three-Month High on Stock Inflows

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Sept. 10 (Bloomberg) -- Taiwan’s dollar touched the strongest level since June after exports increased for a fourth month and global funds accelerated purchases of local equities.

Overseas shipments, which account for about three-quarters of the island’s gross domestic product, rose 3.6 percent in August from a year earlier, while the trade surplus was $4.6 billion from $3.2 billion the month before, official data showed yesterday. Foreign investors bought $2.4 billion more Taiwanese shares than they sold in nine trading days through today, taking net purchases this year to $3.3 billion, exchange data show.

The Taiwan dollar strengthened 0.2 percent to NT$29.760 against the greenback, Taipei Forex Inc. prices show. It touched NT$29.622 earlier, the strongest level since June 7. The island’s dollar rallied 0.7 percent in the past month, the most after South Korea’s won among Asia’s 11 most-traded currencies.

“Now that major economies like Europe, the U.S. and China are recovering, funds flow toward places that benefit from exports, such as Taiwan,” said Andrew Tsai, an economist at KGI Securities in Taipei. “You can see the Korean won and the Taiwan dollar have been appreciating since the end of August due to equity allocation.”

The island’s dollar was trading 0.5 percent stronger nine minutes before the 4 p.m. close today. The central bank has sold the currency in the run-up to the finish on most days since March 2012, according to traders who asked not to be identified.

One-month non-deliverable forwards weakened 0.1 percent to NT$29.627 per dollar, according to data compiled by Bloomberg. One-month implied volatility, a gauge of expected moves in the exchange rate used to price options, increased one basis point, or 0.01 percentage point, to 4.19 percent.

The yield on Taiwan’s government bonds due September 2023 dropped one basis point to 1.78 percent in when-issued trading, according to Gretai Securities Market. The notes are due to be officially auctioned on Sept. 14. The overnight interbank lending rate was steady at 0.384 percent, a weighted average compiled by the Taiwan Interbank Money Center showed.

To contact the reporter on this story: Justina Lee in Hong Kong at jlee1489@bloomberg.net

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

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