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Taiwan Dollar in Longest Losing Streak in Two Years on Outflows

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Nov. 13 (Bloomberg) -- Taiwan’s dollar declined for a sixth day, the longest losing streak in two years, on speculation the U.S. will start cutting stimulus as soon as December.

Global funds sold some $355 million more domestic equities than they bought in November, after bringing in $7 billion in the prior two months as the Federal Reserve maintained its monthly asset purchases. The yield on 10-year U.S. Treasuries climbed to an eight-week high as Fed Bank of Atlanta President Dennis Lockhart said reducing bond buying “ought to be on the table at upcoming meetings” by the central bank, including the Dec. 17-18 policy review.

“The direction of fund flows isn’t as consistently positive as before,” said Scott Chen, a Taipei-based economist at Bank SinoPac. “As returns on U.S. Treasuries rise, the relative attractiveness of emerging-market equities has declined.”

Taiwan’s dollar slid 0.1 percent to NT$29.65 against the greenback, prices from Taipei Forex Inc. show. The currency dropped for a sixth day, the longest streak since November 2011. It lost 0.2 percent in the last 18 minutes of trading amid suspected central bank intervention. The monetary authority has sold the currency in the run-up to the close on most days since March 2012, according to traders who asked not to be identified.

One-month non-deliverable forwards on Taiwan’s dollar were little changed at NT$29.579 per dollar, according to data compiled by Bloomberg. The contracts touched NT$29.620 today, the weakest level since Sept. 17.

One-month implied volatility, a gauge of expected moves in the exchange rate used to price options, decreased one basis point, or 0.01 percentage point, to 3.42 percent.

Bonds Gain

The yield on the 1.25 percent bonds due October 2018 fell one basis point to 1.134 percent, according to Gretai Securities Market. The overnight interbank lending rate was steady at 0.387 percent, a weighted average compiled by the Taiwan Interbank Money Center showed.

Taiwan’s government will lower this year’s growth forecast from 2.31 percent as weak exports in October affected private investment and consumption, Apple Daily reported, citing statistics bureau minister Shih Su-mei.

U.S. employers added 204,000 workers last month, official figures showed Nov. 8, compared with the 120,000 median estimate of economists in a Bloomberg survey. Separate Bloomberg polls conducted Nov. 8 and Oct. 17-18 showed most economists forecast the Fed would keep the level of its monthly bond purchases at $85 billion until March.

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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