Taiwan Dollar Rises This Week on Stock Inflows as China Rebounds

Taiwan’s dollar advanced this week, as foreign investors boosted holdings of local stocks and China’s economy showed signs of recovery.

Global funds bought $670 million more of the island’s shares than they sold this week, the most since April, exchange data show. The yuan headed for its biggest weekly rally since 2011 after data released on June 8 showed May exports from China, Taiwan’s top overseas market, beat analysts’ estimates to produce the biggest trade surplus in five years.

“Funds continue to enter Taiwan and the yuan’s recovery boosted emerging-market currencies,” said Andrew Tsai, a Taipei-based economist at KGI Securities. “The economy in China, the core support for emerging markets, is also showing signs of a rebound.”

Taiwan’s dollar appreciated 0.1 percent this week to NT$30.053 versus its U.S. counterpart, prices from Taipei Forex Inc. show. The currency slipped 0.2 percent in the last 16 minutes of trading to close little changed from yesterday amid suspected central bank intervention. One-month non-deliverable forwards were little changed this week and today at NT$29.962, data compiled by Bloomberg show.

One-month implied volatility, a gauge of expected moves in the exchange rate used to price options, slid 31 basis points, or 0.31 percentage point, since June 6 and 15 basis points today to 2.75 percent.

Sovereign bonds fell this week, with the yield on the 1.5 percent notes due March 2024 increasing two basis points to 1.552 percent, according to prices from GreTai Securities Market. The rate was little changed today. Taiwan sold NT$40 billion ($1.3 billion) of 10-year securities at 1.553 percent today, near the 1.55 percent median estimate in a Bloomberg News survey of fixed-income traders.

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

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