HALISTER1: TWD Trims Losses as Exporters Sell USD on Rally; Yields Rise

TWD Trims Losses as Exporters Sell USD on Rally; Yields Rise

(Bloomberg) -- Taiwan dollar trims losses to fall most in a week as exporters selling of U.S. dollar helped to offset broad USD strength after the Jackson Hole summit.
  • Some foreign investors bought dollars earlier in the morning, two traders say
    • But exporters were actively selling USD/TWD above 31.8 level as pair has hardly broken above this level in August; exporters tend to sell dollar at month-end, one of the trader said
  • TWD falls 0.4%, most since Aug. 22, to close at 31.801 per dollar, after retreating to 31.878, lowest since Aug 1
  • Likelihood of Fed rate hikes will continue to drive dollar valuation in coming weeks, Scotiabank Asia FX strategist Gao Qi writes today
    • Expects USD advance vs EM Asian currencies early this week after Fed vice-chair Fischer’s remarks significantly increased the possibility of a Sept. rate rise
    • BOJ governor Kuroda’s Friday comments imposes depreciation pressure on JPY and subsequently weakens TWD to some extent
  • Yield of 10-yr Taiwan govt bond rises 2 bps to 0.6558%
  • Local bonds retrace after U.S. Treasury yields increased on Friday, Yuanta Securities bond trader Tobby Lin says
    • But liquidity still ample on the island; Taiwan bonds will fluctuate along with Treasury trend in near term
    • 20-yr govt bond faces correction after recent gains
    • Sees 10-yr govt bond yield in 0.65%-0.68% range; 5-yr yield to trade within 0.50%-0.52%
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

People
Qi Gao (Bank of Nova Scotia Asia Ltd/Singapore)
Tobby Lin (Yuanta Securities Co Ltd)

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