BLBG:Taiwan’s Dollar Set for Best Week Since April on ECB; Bonds Drop
Taiwan’s dollar headed for the best week since April after the European Central Bank unveiled a bond-buying plan to contain the euro zone’s debt crisis, boosting demand for riskier assets.
ECB President Mario Draghi said policy makers agreed to an unlimited securities-purchase program to reduce interest rates for struggling nations and fight speculation of a breakup of the euro. Taiwan’s exports probably fell 2.7 percent in August from a year earlier, a sixth month of declines, a Bloomberg survey of economists showed before data due today. Government bonds fell the most in more than two weeks.
“Emerging-market sentiment improved sharply following the ECB bond-buying announcement,” said Dariusz Kowalczyk, senior economist and strategist at Credit Agricole CIB in Hong Kong. “Today’s data will highlight Taiwan’s exports aren’t doing well and the Taiwan dollar will underperform regional peers.”
The Taiwan dollar strengthened 0.5 percent this week to NT$29.814 against its U.S. counterpart as of 10:06 a.m. local time, set for the biggest gain since the five-day period ended April 27, according to Taipei Forex Inc. It rose 0.3 percent today and reached NT$29.77, the strongest level since July 6.
One-month implied volatility in the currency, a measure of exchange-rate swings used to price options, climbed six basis points, or 0.06 percentage point, to 3.6 percent.
The Taiwan dollar’s one-month non-deliverable forwards climbed 0.2 percent to NT$29.777 per dollar today, indicating the currency will advance 0.1 percent within a month, according to data compiled by Bloomberg.
Government bonds dropped. The yield on Taiwan’s 1.125 percent notes due September 2022 rose one basis point to 1.171 percent, according to Gretai Securities Market. That’s the biggest decline since Aug. 21 in benchmark 10-year rates, which slipped one basis point during the five-day period.
The overnight money-market rate held at 0.39 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: James Regan at jregan19@bloomberg.net
