Taiwan Dollar in Longest Winning Streak in Two Years on Inflows

Taiwan’s dollar climbed for a seventh day, the longest winning streak since January 2012, after global investors boosted holdings of local equities.

Overseas funds bought $2.5 billion more Taiwanese stocks than they sold last month, after a net outflow of $361 million in February, exchange data show. The Taiex index rallied to the highest level since June 2011. Federal Reserve Chair Janet Yellen said yesterday that the U.S. economy still needs stimulus, which has driven capital into emerging markets.

“Taiwan’s stocks have been quite strong, so equity inflows have given some support to the currency,” said Cindy Yu, an economist at Fubon Commercial Bank in Taipei. “Yellen emphasized the economy still needs the support of loose monetary policy, so the U.S. dollar fell.”

Taiwan’s dollar strengthened 0.3 percent to NT$30.435 against its U.S. counterpart, according to prices from Taipei Forex Inc. That’s the biggest gain since Jan. 29 and takes the currency’s seven-day advance to 0.7 percent.

One-month non-deliverable forwards rose 0.4 percent to NT$30.315 against the greenback, according to data compiled by Bloomberg. One-month implied volatility, a gauge of expected moves in the exchange rate used to price options, fell six basis points, or 0.06 percentage point, to 3.55 percent.

The Fed has trimmed its bond-purchase program in $10 billion increments to $55 billion this year. Yellen said yesterday the U.S. economy will need support for “some time.”

The Purchasing Managers’ Index of Taiwan manufacturing fell to 52.7 in March from 54.7 the previous month, HSBC Holdings Plc and Markit Economics reported today. That’s above the 50 level that divides expansion from contraction.

The yield on Taiwan’s 1 percent government bonds due February 2019 rose one basis point to 1.1070 percent, according to prices from Gretai Securities Market. The overnight interbank lending rate was steady at 0.385 percent, a weighted average compiled by the Taiwan Interbank Money Center showed.

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