Taiwan’s dollar touched a two-week high as speculation the central bank will favor appreciation to combat inflation encourages exporters to repatriate income. Government bonds were little changed. Overseas investors sold $248 million more Taiwanese stocks than they bought last week as signs Europe’s debt crisis is worsening dimmed the outlook for the global economy. The island’s export orders fell 1.6 percent from a year earlier in March, the government reported April 20. Data today showed industrial output sank 3.42 percent during the same period, the fourth drop in five months. Consumer prices rose 1.21 percent, after a 0.23 percent increase in February, official figures show. Taiwan’s dollar was steady at NT$29.524 against its U.S. counterpart, and touched NT$29.395 earlier, the strongest level since April 5, according to Taipei Forex Inc. “With the lack of foreign investors coming into Taiwan, gains today are mainly being driven by exporters selling the greenback,� said Tarsicio Tong, a currency trader at Union Bank of Taiwan (2838) in Taipei. “The currency has been hovering around NT$29.50 for months. It’d be interesting to see if the central bank will tolerate more appreciation to fight inflation.� Inflation Fight The central bank may allow faster gains in the local dollar and the overnight rate to control inflation, the Commercial Times reported on April 17, citing an unidentified official. The overnight money-market rate was little changed at 0.49 percent today, according to a weighted average compiled by the Taiwan Interbank Money Center. It reached 0.495 percent on April 20, the highest level since 2008. The unemployment rate declined to 4.14 percent last month from 4.15 percent in February, the statistics bureau said today. The yield on the government’s 1 percent securities due January 2017 was little changed at 1.039 percent, according to Gretai Securities Market. The government will sell NT$40 billion ($1.4 billion) of 20-year bonds tomorrow at 1.72 percent, a Bloomberg survey of fixed-income traders showed. One-month implied volatility on the Taiwan dollar, a measure of exchange-rate swings traders use to price options, dropped 10 basis points to 3.4 percent. A basis point is 0.01 percentage point. 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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