Taiwan dollar forwards strengthened for a fifth day on signs the world’s largest economy is improving, spurring demand for the island’s stocks.
The MSCI Asia Pacific Index of shares rose by the most in a month after data showed US industrial production gained and earnings topped estimates at almost three quarters of companies in the S&P 500 that have so far released results. Taiwan’s export orders advanced 1.9 percent in September from a year earlier, after dropping 1.5 percent the previous month, according to a Bloomberg survey before data due tomorrow.
“Global sentiment is better for Asian currencies,” said Tarsicio Tong, a currency trader at Union Bank of Taiwan (2838) in Taipei. “There could be some kind of adjustment from the central bank, to make the appreciation in the Taiwan dollar slower.”
One-month non-deliverable forwards gained 0.1 percent to NT$29.100 as of 10:37 a.m. in Taipei, according to data compiled by Bloomberg. The contracts reached NT$29.071 earlier, the strongest level since May 9, and are at a 0.3 percent premium to the spot rate.
In the spot market, the local currency strengthened 0.4 percent to NT$29.173 against its US counterpart, data from Taipei Forex Inc. showed. It touched NT$29.142 earlier, the strongest level since May 2. The Taiwan dollar may reach NT$29 in the next two weeks, Tong predicted. One-month implied volatility, a measure of exchange-rate swings used to price options, increased one basis point, or 0.01 percentage point, to 3.50 percent.
Taiwan’s central bank has intervened to stem advances in the currency in late trading on most days in the past five months, according to traders who asked not to be identified.
The yield on the 2 percent government bonds due July 2017 was little changed at 0.88 percent, according to Gretai Securities Market. The overnight interbank lending rate was steady at 0.388 percent, a weighted average compiled by the Taiwan Interbank Money Centre shows.