Taiwan Dollar Weakens Most in Two Months as Stock Inflows Ebb

  • Central bank report fuels expectations it will cut rates again
  • Foreign funds exiting and importers buying dollars: traders

Taiwan’s dollar depreciated the most since January as equity inflows ebbed amid a rebound in the greenback.

The island’s stocks snapped an eight-day rally that was the longest in three years as the market recorded the smallest foreigner inflow in two weeks. A gauge of the dollar rebounded from a four-month low as demand for emerging-market assets weakened after worse-than-expected Chinese trade data renewed concerns about global growth. Taiwan’s central bank said in a report to lawmakers seen by Bloomberg News on Tuesday that it’s difficult to achieve marked economic growth this year, fueling bets it will add to last year’s two interest rate cuts on March 24.

Taiwan’s dollar fell 0.5 percent, the most since Jan. 6, to NT$33.225 versus the greenback, according to prices from Taipei Forex Inc. The currency has advanced 0.8 percent against the U.S. counterpart in March as all 11 major Asian peers tracked by Bloomberg strengthened. Foreign investors are taking funds out of Taiwan and importers are buying dollars, according to two traders who asked not to be identified.

‘Upward Correction’

"Inflows may be falling as currencies other than the dollar have been in an upward correction for a while," said Samson Tu, a fund manager at Uni-President Asset Management Corp. in Taipei. "The general meaning of the central bank’s report shows Taiwan is leaning toward another rate cut this month."

One-month non-deliverable forwards on Taiwan’s dollar fell 0.1 percent to NT$32.860, taking their three-day decline to 1.3 percent, data compiled by Bloomberg show. Global funds bought a net $87 million Taiwanese shares on Wednesday, the least since a net sale on Feb. 24.

Maintaining dynamic stability in Taiwan’s dollar helps the economy develop steadily in the long run, the central bank said in its report. The inflation outlook is mild and bank loan growth as slowed amid a weakening economic outlook, it added.

Government bonds climbed, with the 10-year yield falling two basis points to 0.808 percent, a record-low close for a benchmark note of that tenor.

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