Taiwan Dollar Forwards Decline on Stock Outflows; Bonds Steady

Taiwan dollar forwards dropped after global funds cut holdings of the island’s stocks for a third day, as earnings results from HTC Corp. missed estimates. Government bonds were little changed.

Global funds sold $236 million more Taiwanese stocks than they sold today, according to exchange data. HTC Corp., Asia’s second-largest smartphone maker, posted operating income that was lower than analysts’ estimates yesterday as a lack of new models caused a loss of market share. The island’s overseas sales rose 9 percent from a year earlier in December, following a 0.9 percent increase in November, data showed yesterday.

“HTC’s earnings show global demand for consumer electronics hasn’t really picked up yet,” said Ma Tieying, a Singapore-based economist at DBS Group Holdings Ltd. “The central bank will probably maintain a stable currency going forward.”

One-month non-deliverable forwards weakened 0.1 percent to NT$29.015 per dollar as of 4:10 p.m. in Taipei, according to data compiled by Bloomberg. The contracts are at a 0.4 percent premium to the spot rate, which was little changed at NT$29.127, based on Taipei Forex Inc. prices. Ma forecasts the currency will strengthen to NT$28.7 by the end of March.

The monetary authority has bought the greenback to counter appreciation in the island’s currency on most days in the past nine months, according to traders who asked not to be identified. The central bank’s mandate is to keep relative exchange-rate stability and to intervene in the event of abnormal moves, Governor Perng Fai-Nan said Dec. 19.

One-month implied volatility in the Taiwan dollar, a gauge of expected moves in exchange rates used to price options, slipped 18 basis points, or 0.18 percentage point, to 3 percent.

The yield on the 1.125 percent bonds due September 2022 was little changed at 1.169 percent, according to Gretai Securities Market. The overnight interbank lending rate was steady at 0.386 percent, a weighted average compiled by the Taiwan Interbank Money Center shows.

Before it's here, it's on the Bloomberg Terminal.