Taiwan Dollar Rises as Stock Gains Draw Investors; Bonds Climb

By Bob Chen and Yu-huay Sun

March 16 (Bloomberg) -- Taiwan’s dollar rose versus the U.S. currency, adding to gains in the last two weeks, as a global stocks rally helped revive demand for emerging-market assets. Bonds advanced.

The Bloomberg-JPMorgan Asia Dollar Index, which tracks the region’s 10 most-traded currencies excluding the yen, and the MSCI Asia-Pacific Index of shares both climbed, adding to their biggest weekly gains of the year. Overseas investors bought more Taiwan shares than they sold for the past four trading days, stock exchange data show.

“Short-term, with the rally in equities continuing and the buying of Asian stocks having picked up in recent days, that’s very positive for Asian currencies,” said Mitul Kotecha, head of global foreign-exchange strategy at Calyon, the investment- banking unit of French bank Credit Agricole SA. “I’m not exactly positive for the medium term. We’re still in a high- risk-aversion environment.”

Taiwan’s dollar gained 0.2 percent to NT$34.416 versus the greenback at 4 p.m. local time, the strongest close since Feb. 16, according to Taipei Forex Inc. The currency climbed 0.8 percent last week, its best performance since Dec. 20.

Taiwan’s 10-year bonds climbed for a fourth day on speculation global funds are boosting their holdings of the securities. Overseas investors have moved large sums “in and out” of Taiwan, and some of them bought Taiwan government bonds, Perng Fai-nan, governor of the Central Bank of the Republic of China (Taiwan), told lawmakers on March 12.

“There’s a liquidity rally, propelled by fund inflows into bonds,” said Eric Hsing, a bond trader at First Taisec Securities Inc. in Taipei. “When funds are coming in, Taiwan- dollar assets are lifted.”

The yield on the 1.375 percent bond maturing March 2019 declined two basis points to 1.50 percent as of the 1:30 p.m. close in Taipei, according to Gretai Securities Market, Taiwan’s biggest exchange for bonds. Its price climbed 0.133, or NT$133 per NT$100,000 face amount, to 98.8096.

To contact the reporters on this story: Bob Chen in Hong Kong at bchen45@bloomberg.net. Yu-huay Sun in Taipei ysun7@bloomberg.net