Taiwan Dollar Touches Two-Week High on Inflows, Resurgent Won

Taiwan’s dollar touched a two-week high as foreign investors added to their holdings of the island’s stocks and South Korea’s won rebounded.

Global funds bought some $635 million more Taiwanese equities than they sold this week, exchange data show. A report due tomorrow is forecast to show the economy expanded 3.2 percent in the last three months, the fastest pace in six quarters. The won has gained 1.1 percent since touching a two-month low on July 16, making it harder for South Korea’s electronics manufacturers to compete with Taiwanese rivals in international markets.

“The won’s appreciation has lifted the Taiwan dollar since both are similar export-oriented economies,” said Cindy Yu, a Taipei-based economist at Fubon Commercial Bank. “Foreign investors are still positive about Taiwan’s stocks.”

Taiwan’s dollar closed little changed at NT$30.010 against its U.S. counterpart, prices from Taipei Forex Inc. show, after slipping 0.2 percent in the last 29 minutes of trading amid suspected central bank intervention. The currency earlier touched NT$29.91, the strongest level since July 11.

One-month non-deliverable forwards were steady at NT$29.965 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, increased three basis points to 2.36 percent.

The 1.125 percent sovereign bonds due July 2019 reversed earlier declines after the government sold NT$35 billion ($1.2 billion) of 30-year debt at 2.3 percent, compared with the 2.35 percent median estimate in a Bloomberg News survey of nine fixed-income traders. The yield closed little changed at 1.176 percent.

The rate earlier rose to 1.199 percent after the central bank yesterday said it would sell NT$20 billion of two-year certificates of deposit next month, compared with the NT$10 billion it has offered each month since August 2013.

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