Taiwan bond yields at record low, currency drops as growth wanes
The yield on Taiwan’s 10-year bonds dropped to a record low and the local dollar fell to the weakest level in more than six months on concern the island’s economic growth is stalling.
The government may report on July 31 that gross domestic product rose 0.5 percent in the second quarter from a year earlier, following a 0.4 percent increase in the previous three months, according to the median estimate of economists in a Bloomberg News survey. GDP grew 4 percent in 2011. Factory output declined 2.44 percent last month, following a 0.21 percent drop in May, official data showed on July 23.
“Both local and global economic situations are favouring bonds,” said James Wang, a debt trader at Yuanta Securities Co. in Taipei. “There’s not much chance for people to lose money buying bonds.”
The yield on the 1.25 percent notes due March 2022 dropped one basis point to 1.13 percent, the lowest level since at least March 2002, according to Gretai Securities Market.
The overnight money-market rate was little changed at 0.387 percent, according to a weighted average compiled by the Taiwan Interbank Money Centre. It fell 12 basis points, or 0.12 percentage point, this month.
The Taiwan dollar weakened 0.3 percent to NT$30.206 against its US counterpart, according to Taipei Forex Inc., after touching NT$30.23 earlier, the weakest level since January 9. One- month implied volatility, a measure of exchange-rate swings used to price options, climbed 54 basis points to 4.25 percent. -By Andrea Wong
Category: Taiwan
