Taiwan Dollar Declines Most in Three Weeks on Singapore Surprise

Taiwan’s dollar dropped the most in three weeks as Asian currencies declined following Singapore’s surprise decision to ease monetary policy.

Singapore’s dollar traded near a four-year low after authorities said they will seek slower appreciation in the currency, while South Korea’s won fell 0.9 percent. Taiwan’s economy expanded 3.25 percent last quarter, the slowest pace since the three months through September 2013, according to a Bloomberg survey before data due Friday. A weaker currency may help revive exports, which contracted in December for the first time in almost a year.

The move in Taiwan’s dollar “reflects Singapore’s decision and the other Asian currencies depreciating,” said Tarsicio Tong, a foreign-exchange trader at Union Bank of Taiwan in Taipei. While overseas funds aren’t yet leaving the island, there are importers buying foreign currencies, he said.

Taiwan’s dollar closed down 0.6 percent, the most since Jan. 5, to NT$31.512 against its U.S. counterpart, Taipei Forex Inc. prices show. The currency slipped 0.4 percent in the final 32 minutes of trading on speculation the central bank intervened. The monetary authority has sold the local dollar in the run-up to the close on most days since March 2012, according to traders who asked not to be identified.

Stock Inflows

One-month non-deliverable forwards fell 0.8 percent to NT$31.463 a dollar, according to data compiled by Bloomberg. One-month implied volatility in Taiwan’s currency, a gauge of expected swings in the exchange rate used to price options, rose 14 basis points, or 0.14 percentage point, to 4.77 percent.

The island’s dollar has gained 0.6 percent in January, set for its first monthly advance since August, as global funds pumped $2.2 billion into Taiwanese equities, exchange data show. The inflows helped drive the benchmark stock index to its highest close since July on Tuesday. Net purchases slowed to $5.3 million Thursday, preliminary data show, compared with an average $406 million on the last eight days.

Government bonds climbed for a second day, pushing the yield on the September 2024 notes down one basis point to 1.490 percent, GreTai Securities Market prices show.

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