Taiwan’s dollar snapped a six-day decline as speculation the International Monetary Fund will help Italy boosted optimism Europe will be able to contain its debt crisis, spurring demand for emerging-market assets. Bonds fell. The local dollar rebounded from a six-week low and the Taiex (TWSE) index of shares rallied by the most in two weeks after Italian newspaper La Stampa reported, without saying where it got the information, that the IMF is preparing a 600 billion euro ($799 billion) loan for the euro area’s third-largest economy in case its debt burden worsens. Global funds sold $1.2 billion more of the island’s stocks than they bought last week, the biggest sell-off in two months, according to exchange data. “It’s mostly foreign funds and exporters buying the Taiwan dollar today on the good news from Europe,� said Henry Lin, a Taipei-based foreign-exchange trader at Taiwan Shin Kong Commercial Bank. “But bad news should continue to dominate the market, leading the Taiwan dollar on a weaker trend.� The Taiwan dollar strengthened 0.2 percent to NT$30.398 against its U.S. counterpart as of 9:59 a.m. local time, according to Taipei Forex Inc. The currency touched NT$30.505 on Nov. 25, the weakest level since Oct. 12. Lin forecast it will weaken to NT$31 by the end of the year. The benchmark share index rose 1.3 percent. The yield on Taiwan’s 1.25 percent bonds due September 2021 rose one basis point, or 0.01 percentage point, to 1.332 percent, prices from Gretai Securities Market show. The overnight money-market rate, which measures interbank funding availability, was steady at 0.392 percent, according to a weighted average compiled by the Taiwan Interbank Money Center. To contact the reporter on this story: Andrea Wong in Taipei at awong268@bloomberg.net To contact the editor responsible for this story: Sandy Hendry at shendry@bloomberg.net

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