Taiwan’s dollar rose to a five-month high on optimism the island’s economy will benefit from an expansion of monetary stimulus in China, its largest export market.
The People’s Bank of China announced a one percentage point cut to lenders’ reserve-requirement ratios on Sunday, the most since the global financial crisis. The move will unleash around 1.2 trillion yuan ($193 billion), potentially boosting China’s stock market and aiding sentiment toward regional bourses.
“Funds may invest in other Asian currencies first before the yuan,” said Samson Tu, a fund manager at Uni-President Asset Management Corp. in Taipei.
Taiwan’s dollar strengthened 0.2 percent to NT$31.102 against the greenback, Taipei Forex Inc. prices show. The currency climbed to NT$30.972 earlier, the strongest level since Nov. 28. One-month non-deliverable forwards were little changed at NT$30.983, according to data compiled by Bloomberg.
The PBOC lowered the reserve-requirement ratio to 18.5 percent effective Monday. That was the second reduction this year and the largest since November 2008. The move came after a report showed Asia’s largest economy grew at the slowest pace in six years in the first quarter.
Taiwan’s five-year sovereign bonds were steady, with the yield at 0.996 percent, according to Taipei Exchange prices.