Taiwan's dollar reversed an early loss to notch up its biggest gain since June 22 on speculation the central bank bought the currency to stem an outflow of capital.
Investors have been borrowing the currency at the island's second-lowest interest rate in Asia after Japan to invest in higher-yielding assets abroad. The currency has weakened along with the yen over the past 12 months as the currencies are favorites for the carry trade.
"The central bank may have sold US dollars heavily just before the close," said Catherine Tan, head of emerging markets at Forecast Singapore Ltd. The bank "caught the market unawares."
The Taiwan dollar rose 0.4 percent to NT$32.666 against the US currency at 4pm, the strongest close in six months, according to Taipei Forex Inc. It dropped as much as 0.2 percent to NT$32.864 today. Duann Jin-sheng (
Taiwan's 10-year government bonds advanced, ending eight days of losses, on speculation an increase in the cost of borrowing prompted traders to buy back borrowed assets they'd sold hoping to repurchase them at a profit when the price fell, so-called short positions.
The cost for loaning benchmark debt for one day surged to an annual 29 percent from 10 percent last week, according to Eric Hsing of First Taisec Securities Inc.
"The main reason for yields to fall is short sellers covering positions," said Hsing, a Taipei-based bond trader."Costs for short selling tripled."
The yield on the benchmark 1 7/8 percent bond maturing March 2017 declined 5.3 basis points, or 0.053 percentage point, to 2.569 percent, according to Gretai Securities Market, Taiwan's biggest exchange for bonds. The price climbed 0.4330, or NT$433 per NT$100,000 face amount, to 94.1132. Bond yields move inversely to prices.
BULK PURCHASE: The French chain and Hong Kong-based Dairy Farm International reached a deal covering 224 stores, which is expected to be finalized by year’s end Carrefour SA yesterday announced it would acquire Wellcome Taiwan Co (惠康百貨) for 97 million euros (US$108.33 million), and bring all the Wellcome supermarkets (頂好超市) and Jasons Market Place stores nationwide under its banner within 12 months of the deal closing. The France-based hypermarket chain reached an agreement with Hong Kong-based Dairy Farm International Holdings (牛奶國際控股), the pan-Asian retailer that launched Wellcome Taiwan in 1987. The transaction involves 199 Wellcome supermarkets, which have average sales areas of 420m2 and 25 high-end Jasons Market Place stores, which have an average sales area of 820m2, as well as a warehouse in Taoyuan, Carrefour Taiwan (家樂福)
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SCATTERED: Production would be dispersed among a number of countries, which would bring an end to so-called world factories, Hon Hai chairman Young Liu said Decentralized production would be the new focus in manufacturing, Hon Hai Precision Industry Co (鴻海精密) chairman Young Liu (劉揚偉) yesterday told an online forum held by the Market Intelligence & Consulting Institute (MIC, 產業情報研究所). “The COVID-19 pandemic exerted a heavy impact on supply chains as well as production ... [production] would no longer be concentrated in solely one country, this is the end of what we used to call world factories,” Liu said during a panel discussion hosted by MIC director Victor Tsan (詹文男). As the US and China continue to dominate and sway international relations, the rest of the world is
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