Taiwan Dollar in Biggest Weekly Gain Since 2013 on Fed Outlook

Taiwan’s currency rose the most since July 2013 this week as the dollar retreated after data that prompted investors to pare bets for U.S. interest-rate increases.

The Bloomberg Dollar Spot Index halted a four-week advance after reports showed U.S. average hourly earnings unexpectedly fell last month and retail sales declined more than economists forecast. The Taiwan dollar rose along with the currencies of its exporting competitor neighbors of Japan and South Korea, which all led gains in Asia this week.

“U.S. data were disappointing, so investors have pushed back the expected timing of a rate hike,” said Chu Yen-min, president of KGI Securities Investment Advisory in Taipei.

Taiwan’s dollar strengthened 0.9 percent from Jan. 9, the best weekly performance since the five days through July 12, 2013, to NT$31.645 against its U.S. counterpart, Taipei Forex Inc. prices show. The currency climbed 0.5 percent today, the biggest advance since August 2013.

One-month non-deliverable forwards climbed 1.3 percent this week and 0.6 percent today to NT$31.490, according to data compiled by Bloomberg.

Futures show a 59 percent chance the Federal Reserve will raise interest rates by June, compared with 70 percent a week ago and helping support demand for local bonds.

The yield on Taiwan’s 1.625 percent government notes due September 2024 dropped five basis points, or 0.05 percentage point, to 1.475 percent today, GreTai Securities Market prices show. The yield fell nine basis points for the week and was at the lowest level for a benchmark of that maturity since May.

The Swiss National Bank unexpectedly scrapped its exchange-rate cap on the euro yesterday, while lowering already-negative rates. Treasuries jumped after the news on speculation the move was a precursor to the European Central Bank announcing sovereign-bond purchases next week.

“It’s not even certain any more that the U.S. will raise rates this year,” said Jeffrey Huang, a fixed-income trader at KGI Securities Co. in Taipei. “The financial markets have been so volatile lately that funds are still going to bonds.”

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