Halister News

(Bloomberg) -- TWD rises along with other emerging market assets, as risk-on sentiment picks up after a poll shows U.K. is more likely to stay in the E.U.

• TWD gains 0.4% to 32.256 vs dollar, strongest since June 8; bonds decline
• The currency gains on easing risk concerns because of the poll, says Tieying Ma, economist at DBS
  • Should Brexit materalizes, TWD is buffered by the island’s strong trade surplus, which can offset capital account outflow; Taiwan’s FX reserves is big enough to calm mkt and allows the central bank to defend TWD if necessary
  • Expects CBC to cut benchmark interest rate at the June 30 meeting to boost growth, given weak April & May economic data; delayed rate hike in U.S. is supportive for Asian central banks to lower rates
  • CBC move could lead to capital outflow and pressure on TWD; yr-end target 32.9 vs dollar
• Yield of 10-yr Taiwan govt bond rises 0.46 bp to 0.7912%, highest since June 8
• Govt bonds are suppressed given recent U.K. poll, says Star Lai, bond trader at Kgi Securities; expects yield of 10-yr note between 0.75% - 0.85% this week
  • Mkt may be disappointed if CBC doesn’t cut overnight rate
  • The scale of any cut on rates of certificates of deposit, a major income source for banks, will be crucial; decline of less than 7 bps, the scale of the last reduction, could mean the end of rate-cut cycle
• Overseas investors buy net NT$4.27b ($132.32m) of slocal shares
• Taiwan May export orders fall 5.8% y/y vs median est of a 7% drop
• Taiwan Premier Lin appoints Shih Jun-ji as new chairman of Taiwan Stock Exchange