Taiwan Dollar Forwards Drop a Second Week on China Slowdown Woes

Taiwan dollar forwards completed a second weekly decline on concern China’s economic slowdown will weaken the island’s growth.

A manufacturing gauge for China compiled by HSBC Holdings Plc and Markit Economics was at 48.3 in April, signaling a fourth month of contraction, according to an April 23 report. A reading below 50 indicates a decline. Gains in Taiwan’s factory output slowed to 3.05 percent in March from 6.83 percent in February, official data showed this week.

“The sentiment has been subdued with lingering worries over China’s growth,” said Frances Cheung, a Hong Kong-based head of Asian rates strategy at Credit Agricole CIB. “There is no obvious impetus for trading in the Taiwanese dollar, which explains the limited price action thus far today.”

One-month non-deliverable forwards on the Taiwan dollar declined 0.4 percent this week to NT$30.284 against the greenback, according to data compiled by Bloomberg. The contracts shed 0.1 percent today.

In the onshore spot market, the local currency fell 0.3 percent from a week ago to NT$30.32, prices from Taipei Forex Inc. show. It fell 0.1 percent today. One-month implied volatility, a measure of expected moves in the exchange rate used to price options, dropped one basis point, or 0.01 percentage point, from April 18 to 3.49 percent.

The yield on the 1 percent government bonds due February 2019 fell two basis points today and four basis points this week to 1.038 percent, according to Gretai Securities Market.

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