Taiwan Dollar Ends 3-Day Drop on Stimulus Optimism; Bonds Steady
The Taiwan dollar climbed, halting a three-day decline, on speculation policy makers will this week roll out measures to boost the economy after the government lowered the island’s growth forecast for the year.
The stimulus may include steering life insurance funds to public construction projects, the Commercial Times reported, citing officials. The economy grew a revised 3.97 percent in the fourth quarter from a year earlier, the statistics bureau said on May 24 while cutting its 2013 estimate to 2.4 percent from 3.59 percent. The U.S. dollar’s strength has contributed to a weakening of Asian currencies, and the Taiwan dollar and Thai baht are most at risk, Societe Generale wrote in a note.
“There’s some optimism the Taiwan government may announce an economic stimulus plan this week following the sharp downside growth revision,” said Wee-Khoon Chong, a strategist at Societe Generale SA in Hong Kong. “The local dollar’s strength is unlikely to be long-lasting amidst weakening Asia currency pressure across the region.”
The Taiwan dollar rose 0.4 percent to NT$29.91 against the greenback as of 9:48 a.m. local time, show prices from Taipei Forex Inc. One-month implied volatility, a measure of expected moves in the exchange rate used to price options, climbed one basis point, or 0.01 percentage point, to 4.93 percent.
The yield on the 1.125 percent government bonds due March 2023 traded at 1.289 percent, little changed from 1.294 percent at the end of last week, according to Gretai Securities Market.
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