Taiwan Dollar Steady Before Holiday; Bond, Stock Markets Closed

Taiwan’s dollar was little changed and the island’s stock and bond markets were closed ahead of next week’s Lunar New Year holiday.

Global funds bought $709 million more Taiwanese stocks than they sold in the last three days, taking net purchases this year to $931 million, according to exchange data. The yuan dropped to the weakest level since Dec. 27 today after the People’s Bank of China cut the currency’s reference rate amid speculation Chinese officials are concerned that a slide in the yen will hurt exports. Taiwan’s currency has declined 1.7 percent in the spot market this year.

“It’s the long holiday coming, volume has dropped dramatically,” said Tarsicio Tong, a Taipei-based foreign-exchange trader at Union Bank of Taiwan. “The Taiwan dollar could extend its fall after the holiday as we’re seeing declines in the other major Asian currencies.”

The Taiwan dollar was little changed at NT$29.63 against its U.S. counterpart, according to prices from Taipei Forex Inc. It touched NT$29.70 on Jan. 29, the weakest since Sept. 14. The central bank has sold the local currency near the close on most days in the past 10 months, according to traders who asked not to be identified.

Taiwan’s exports jumped 21.8 percent in January from a year earlier, official data showed today. The median estimate of 15 economists surveyed by Bloomberg News was for a 23.2 percent increase.

One-month implied volatility in the Taiwan dollar, a gauge of expected moves in the exchange rate used to price options, rose 15 basis points, or 0.15 percentage point, to 4.17 percent, according to data compiled by Bloomberg.

The overnight interbank lending rate was little changed at 0.387 percent, a weighted average compiled by the Taiwan Interbank Money Center shows.

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