Taiwan Dollar Touches a Two-Week Low as Output Trails Estimates

Taiwan’s dollar touched a two-week low as data showed factory output grew less than economists estimated. Government bonds were little changed.

Industrial production rose 2.4 percent in December from a year earlier, following a 5.9 percent increase in November, the Ministry of Economic Affairs reported. The gain fell short of all 13 forecasts in a Bloomberg survey. The currency erased an earlier advance on speculation policy makers will seek to curb appreciation that threatens to hurt exports. The central bank has intervened on most days in the past nine months to damp the currency’s strength to protect local manufacturers, according to traders who asked not to be identified.

“There’s no doubt the weaker than expected IP number indicates the recovery is still a bumpy one as demand from the U.S. has yet to fully rebound,” said Donna Kwok, a Hong Kong-based economist at HSBC Holdings Plc. “We should expect more volatility in data in the coming months.”

The currency closed little changed at NT$29.092 per dollar after falling as low as NT$29.12, the weakest level since Jan. 9, according to prices from Taipei Forex Inc. The currency lost a 0.4 percent gain in the final minute of trade. One-month non-deliverable forwards fell 0.1 percent to NT$28.973, data compiled by Bloomberg show.

One-month implied volatility in the Taiwan dollar, a gauge of expected moves in exchange rates used to price options, was unchanged at 2.80 percent, according to data compiled by Bloomberg. It reached 2.6 percent yesterday, the lowest level since September 2007.

The yield on the 1.125 percent bonds due September 2022 was little changed at 1.163 percent, according to Gretai Securities Market. The overnight interbank lending rate was steady at 0.387 percent, a weighted average compiled by the Taiwan Interbank Money Center shows.

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