Taiwan Dollar Climbs as Global Funds Buy Stocks; Bonds Advance

Taiwan’s dollar strengthened, snapping a two-day decline, after overseas investors added to their holdings of the island’s equities. Government bonds rose.

Global funds bought more shares than they sold this week, with net purchases of $965 million, exchange data show. President Ma Ying-Jeou has ruled out driving down the local currency to boost exports and said in an interview with Bloomberg Television yesterday the government still aims for growth of at least 2 percent in 2013.

“The currency has been supported by the reversal of flows into Taiwanese markets, especially in the equity space,” said Wee-Khoon Chong, a strategist at Societe Generale SA in Hong Kong. “Still, we look for a weakening of Taiwan’s dollar going forward along with the rest of emerging Asia, given the weaker yen and slowing China growth.”

The Taiwan dollar gained 0.1 percent today and this week to NT$29.95 against its U.S. counterpart, Taipei Forex prices show. One-month non-deliverable forwards were up 0.1 percent during the five-day period and advanced 0.3 percent today to NT$29.87, data compiled by Bloomberg show. One-month implied volatility, a gauge of expected moves in the exchange rate used to price options, fell 29 basis points from a week ago to 3.6 percent.

The yield on the 0.875 percent notes due January 2018 fell one basis point, or 0.01 percentage point, today to 1.07 percent in Taipei, according to Gretai Securities Market. It rose one basis point this week.

The overnight interbank lending rate was at 0.388 percent, little changed from 0.386 percent a week earlier, according to a weighted average compiled by the Taiwan Interbank Money Center.

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