Taiwan’s dollar rose for the first time in three days after U.S. economic reports indicated a recession may be easing in the world’s biggest economy, brightening the outlook for exports. Bonds slipped. The island’s currency strengthened against the greenback after the Standard & Poor’s 500 Index extended its best monthly rally in 17 years on unexpected growth in durable-goods orders and new-home sales. Local stocks gained on speculation the central bank will today cut interest rates for the eighth time since the start of September to help end a recession at home. “The U.S. recession may not be as deep as investors expected,” said Dariusz Kowalczyk, chief investment strategist at SJS Markets Ltd. in Hong Kong. “For an economy like Taiwan that is so dependent on external demand, an overnight turn of sentiment can have a larger impact than a rate cut.” Taiwan’s dollar gained 0.1 percent to NT$33.865 as of 11:29 a.m. local time, according to Taipei Forex Inc. It’s dropped 3 percent since the end of December, headed for a third quarterly decline. Durable-goods orders in the U.S., Taiwan’s second-biggest export market, rose 3.4 percent in February from the previous month and new-home sales increased 4.7 percent, according to Commerce Department reports published yesterday. Economists surveyed by Bloomberg News before the reports forecast slides of 2.5 percent and 2.9 percent, respectively. Tumbling exports last year dragged Taiwan’s economy into its first recession since 2001 and a pickup in U.S. spending may help revive growth. The island’s export orders fell 22 percent from a year earlier in February, after sliding a record 42 percent the previous month, the government reported this week. Possible Rate Cut The benchmark Taiex index of Taiwan stocks rose as much as 1.4 percent, heading for its highest close since October. The central bank may cut its benchmark interest rate to 1 percent from 1.25 percent, according to 10 of 14 economists surveyed before a policy meeting today. The decision is due after 3 p.m. in Taipei. “I don’t think the rate cut would be a turning point to a bullish currency, but in such a deteriorating global economy, every little bit could help boost risk appetite,” said Emmanuel Ng, an economist at OCBC Bank in Singapore. He predicts the rate won’t go lower than 1 percent. Taiwan’s 10-year government bonds fell for a sixth day as traders waited for the central bank’s rate decision. “Trading is light as people await the central bank’s board meeting,” said Tommy Huang, a bond trader at Taiwan International Securities Corp. in Taipei. “Some bond bulls have become a bit worried the central bank may stop lowering interest rates.” The yield on the 1.375 percent bond maturing March 2019 climbed half a basis point to 1.54 percent, according to Gretai Securities Market, Taiwan’s biggest exchange for bonds. Its price fell 0.043, or NT$43 per NT$100,000 face amount, to 98.4633. A basis point is 0.01 percentage point.

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