Taiwan Dollar Has Best Week in Nine Months as Fed Concern Eases

Taiwan’s dollar completed the best week in nine months on speculation the Federal Reserve will hold off reducing asset purchases that have spurred fund flows to emerging markets. Government bonds gained.

U.S. employment growth slowed in May compared with April, according to a Bloomberg survey before nonfarm payrolls data due today. Fed Chairman Ben S. Bernanke said last month the central bank could taper its $85 billion of monthly debt buying if there are signs or sustained improvement in the jobs market. The yen rose against the dollar by the most in three years yesterday, supporting Taiwanese exporters such as HTC Corp. that compete against Japanese companies in overseas markets.

“Investors are taking a step back and thinking whether the Fed will cut bond purchases, when the economy hasn’t really stabilized yet,” said Frances Cheung, a strategist at Credit Agricole CIB in Hong Kong. “Asian currencies are recovering some of their losses because of that.”

The Taiwan dollar gained 0.6 percent this week to NT$29.871 against its U.S. counterpart as of 4:30 p.m. local time, Taipei Forex Inc. prices show. That was the biggest advance since the period ended Sept. 14, 2012. The currency climbed 0.2 percent today.

The local dollar was trading 0.4 percent stronger one minute before the 4 p.m. close yesterday and finished little changed. The central bank has sold the currency in the run-up to the close on most days in the past year, according to traders who asked not to be identified.

Taiwan’s exports rose 0.9 percent in May from a year earlier, a government report showed today, compared with the median estimate in a Bloomberg survey for a 0.8 percent drop.

Bonds Gain

One-month non-deliverable forwards gained 0.9 percent this week and 0.1 percent today to NT$29.730 against the greenback, data compiled by Bloomberg show. One-month implied volatility, a gauge of expected moves in the exchange rate used to price options, decreased 21 basis points from May 31 to 4.72 percent.

The yield on the 0.875 percent bonds due January 2018 fell two basis points, or 0.02 percentage point, this week to 0.98 percent, according to Gretai Securities Market prices. The rate declined one basis point today.

The overnight interbank lending rate was steady at 0.385 percent, according to a weighted average compiled by the Taiwan Interbank Money Center.

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