Ten-year government bonds fell for a third day, with yields climbing to the highest level in more than six weeks, on speculation a weakening local currency will stoke inflation, eroding the value of debt's fixed payments.
Inflation last year was the fastest in nine years.
"Sentiment in the bond market has turned for the worse, in part as the Taiwan dollar weakens," said Liao Yu-ping, a bond trader at Grand Cathay Securities Corp (大華證券) in Taipei. "Concern over inflation is still there."
The yield on the benchmark 1 5/8 percent bond maturing September 2015 climbed 0.4 basis point, or 0.004 percentage point, to 1.805 percent as of 3:45pm in Taipei, according to Gretai Securities Market. Its price fell 0.0351, or NT$35.1 per NT$100,000 face amount, to 98.4244.
Bond prices, which move inversely to yields, may climb to 1.815 percent this week, Liao said.
Trading totaled NT$542 billion (US$16 billion), according to Gretai.
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