Taiwan Dollar Touches Seven-Month Low as Greenback Demand Rises

Taiwan’s dollar touched the weakest level in more than seven months as optimism the U.S. economy is recovering boosted investors’ demand for the greenback.

Factory orders in the world’s biggest economy rose the most in five months in February, data showed yesterday. The Dollar Index, which tracks the greenback against major currencies, has gained 4.7 percent in the last two months, data compiled by Bloomberg show. The island’s bonds advanced as the finance ministry sold NT$40 billion ($1.3 billion) of five-year debt at 1.017 percent today, compared with the 1.025 percent median estimate of eight fixed-income traders surveyed by Bloomberg.

“The dollar is getting increasingly strong as the economy is showing more signs of improvement,” said Eric Hsing, a fixed-income trader at First Securities Inc. in Taipei, referring to the U.S. currency.

The Taiwan dollar closed at NT$29.925 against its U.S. counterpart, compared with NT$29.920 yesterday, according to Taipei Forex Inc. It touched NT$29.975 earlier, the weakest level since Aug. 31. It was 0.2 percent stronger three minutes before the end of trading at 4 p.m. local time.

The central bank has sold the local currency in the run-up to the close on most days in the past year, according to traders who asked not to be identified.

One-month non-deliverable forwards rose 0.1 percent to NT$29.820 per dollar, according to data compiled by Bloomberg. One-month implied volatility in the Taiwan dollar, a gauge of expected moves in the exchange rate used to price options, rose five basis points, or 0.05 percentage point, to 3.53 percent, according to data compiled by Bloomberg.

The yield on the 0.875 percent bonds due January 2018 fell one basis point to 1.007 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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