Taiwan Bonds Rise Most in Three Weeks on Ukraine, Iraq Tensions

Taiwan’s five-year government bonds rose the most in three weeks as escalating tensions in Ukraine and Iraq fueled demand for safer assets.

Benchmark 10-year Treasury yields tumbled to a one-year low and the Taiex index of shares touched the lowest level since May as Russia banned food imports from nations that imposed sanctions against it for its annexation of Crimea and support of rebels in Ukraine. U.S. President Barack Obama authorized air strikes against militants in Iraq if they threaten American personnel.

The yield on the 1.125 percent bonds due July 2019 declined three basis points, the most since July 15, today and this week to 1.132 percent, prices from GreTai Securities Market show.

“When risk-aversion is on the rise, stocks will definitely fall,” said Kevin Chan, a Taipei-based fixed-income trader at Sinopac Securities Corp. “The local market itself is neutral, but the international market is dragging yields down.”

Taiwan’s exports increased 5.8 percent in July from a year earlier, the fastest pace in three months but less than the 6.8 percent median forecast in a Bloomberg survey, official data showed yesterday.

The island’s dollar was little changed today and this week at NT$30.066 against its U.S. counterpart, prices from Taipei Forex Inc. show. One-month non-deliverable forwards were also steady at NT$30.023, according to data compiled by Bloomberg.

One-month implied volatility, a gauge of expected swings in the exchange rate used to price options, increased five basis point today to 2.62 percent. The measure dropped 12 basis points this week.

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