Taiwan’s dollar completed a third weekly decline as signs of slower economic growth curbed inflows amid a boom in foreign-currency bond issuance.
Export orders fell for a third month in June, official data showed July 20, while industrial production posted a second monthly drop. Corporates have sold $2.5 billion of foreign-currency notes in Taiwan this month, with $296 million of sales planned for August. Insurers buying these bonds use swaps to obtain other currencies, affecting the spot rate, said Woods Chen, an economist at Ta Chong Bank Ltd. in Taipei.
“There’s demand for foreign currencies from insurers, and at the same time there aren’t a lot of inflows,” said Chen. “The drop in export orders shows stronger competition is pressuring prices lower.”
Taiwan’s dollar dropped 0.7 percent, the biggest weekly decline since May 29, to NT$31.530 against the greenback, Taipei Forex Inc. prices show. It fell 0.3 percent on Friday.
Companies have sold $22.7 billion of foreign-currency bonds this year, compared with $24 billion for the whole of 2014 and $1.8 billion in 2013. Such issuance has soared in Taiwan since a rule change excluded these notes from insurers’ overseas investment quota in May 2014.
One-month non-deliverable forwards weakened 1 percent from July 17 to NT$31.433, data compiled by Bloomberg show. The contracts dropped 0.6 percent from Thursday, the most since June 5. Global funds sold $1.3 billion more local shares than they bought this month, exchange data show.
Sovereign bonds advanced this week, with the yield on notes due 2025 falling one basis point to 1.467 percent.