The New Taiwan dollar yesterday climbed for a second day as signs an export slump is abating fueled optimism that strengthening trade ties with China will boost Taiwan’s foreign-exchange earnings. Bonds were little changed.
The currency trimmed this month’s loss to 0.1 percent after the Chinese-language Economic Daily News yesterday reported that China may purchase as much as NT$20 billion (US$611 million) in light-emitting diodes and equipment from Taiwan in the second half of this year. A government report this week showed Taiwain’s exports fell at a slower pace last month than in April.
“Exports are crawling back, Taiwan still has the support of a very large trade surplus to help the currency,” said Richard Yetsenga, Asian currency strategist with HSBC Holdings PLC in Hong Kong. “The dollar went down last night and equities have been stable. That’s a good recipe for Asian currencies.”
The NT dollar gained 0.4 percent to NT$32.727 against the US currency as of 2:39pm local time, according to Taipei Forex Inc. It yesterday touched NT$32.951, the weakest level since May 20. The TAIEX index of shares climbed 0.8 percent, the first advance in three days.
The US dollar weakened against 14 of the 16 most-traded currencies as speculation the global recession is ending reduced the greenback’s safe-haven appeal. The ICE’s Dollar Index, a gauge of its strength against the euro, yen, pound, Canadian dollar, Swiss franc and Swedish krona, dropped 1.3 percent on Thursday, the most this month.
Taiwan’s overseas shipments, which account for about 70 percent of the economy, fell 31 percent last month from a year earlier, compared with a 34 percent decline forecast by a Bloomberg News survey of economists, the Finance Ministry said on Monday. The trade surplus swelled to US$3.2 billion from US$2.1 billion in April.
Industrial output in China, the nation’s No. 1 export destination, grew 8.9 percent last month from a year earlier, the Chinese-language Ming Pao daily reported yesterday, citing unidentified “market sources.”
Production rose 7.3 percent in April. The statistics bureau will report the data tomorrow.
Chi Mei Optoelectronics Corp (奇美電子), the country’s second-largest producer of liquid-crystal displays (LCDs), said prices of the panels will increase in the third quarter because of increased demand from China. Taiwan Semiconductor Manufacturing Co (台積電), the world’s largest custom-chip maker, said the worst is over for the global computer-chip industry.
Taiwan, where the economy is forecast to contract 4.25 percent this year compared with China’s 8 percent growth target, is counting on Beijing’s 4 trillion yuan (US$585 billion) fiscal stimulus to lift Taiwan out of its first recession since 2001.
Local five-year government bonds were little changed.
The yield on the 0.875 percent bond maturing in January 2014 was at 1.04 percent as of the 1:30pm close in Taipei, versus 1.03 percent on Tuesday, according to the GRETAI Securities Market, Taiwan’s biggest exchange for bonds. Its price fell 0.029, or NT$29 per NT$100,000 face amount, to 99.26. A basis point is 0.01 percentage points.
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