Taiwan Dollar Forwards Climb Most in a Week After ECB Stimulus

Taiwan dollar forwards advanced the most in a week on speculation the European Central Bank’s stimulus measures will boost demand for emerging-market assets.

The ECB became the first major monetary authority to use negative deposit rates to spur consumption, and it also said yesterday it would offer liquidity to lenders to spur credit growth. The euro rose against the greenback after the announcement and the Standard & Poor’s 500 Index advanced to a record. The MSCI Asia Pacific Index of shares climbed to a seven-month high today.

“In the short term, the U.S. dollar may weaken, so Taiwan’s dollar may rise a little next week,” said Cindy Yu, a Taipei-based economist at Fubon Commercial Bank. “Looser liquidity in Europe also boosted U.S. and Asian equities, which is good for Asian currencies.”

One-month non-deliverable forwards on Taiwan’s dollar rose 0.12 percent, the most since May 29, to NT$29.995 against the greenback as of 4:21 p.m. in Taipei, data compiled by Bloomberg show. The contracts were little changed this week.

In the spot market, the currency was steady today at NT$30.080 and fell 0.1 percent this week, prices from Taipei Forex Inc. show. One-month implied volatility, a gauge of expected moves in the exchange rate used to price options, slipped one basis point, or 0.01 percentage point, to 3.04 percent. It rose one basis point this week.

Global funds bought $156 million more Taiwanese stocks than they sold this week, exchange data show.

The yield on the 1.5 percent sovereign bonds due March 2024 was little changed today at 1.529 percent, according to prices from GreTai Securities Market. It advanced two basis points this week. The overnight interbank lending rate dropped one basis point this week to 0.384 percent, according to a weighted average compiled by the Taiwan Interbank Money Center.

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