TWD 21 Oct

17:32 21Oct2008 RTRS-Taiwan dollar falls as foreign investors sell stocks

(Updates to close)
TAIPEI, Oct 21 (Reuters) - The Taiwan dollar fell to a one-year closing low on Tuesday, as foreign investors continued selling domestic stocks and as the U.S. dollar rose broadly.
Taiwan's benchmark stock index <.TWII> closed 0.22 percent higher, buoyed by Wall Street's overnight rally, but foreign institutions sold a net T$6 billion ($183 million) worth of shares and that weighed on the local currency, traders said.
"Although the stock market rose today, the 3.5 percent downside limit prompted investors to sell stocks," said a dealer at a local bank.
The financial regulator has extended through the current trading week a temporary measure limiting daily declines for individual stocks to 3.5 percent, half the usual 7 percent limit.
The Taiwan dollar closed at T$32.697 against the U.S. dollar, its lowest finish since Sept. 27, 2007, down from Monday's closing price of T$32.580.
Volume on the main Taipei Forex Inc. was light at $883 million, but up from $556 million a day earlier.
The Taiwan dollar was also pressured by a stronger U.S. dollar, which gained on funding demand from banks. Some foreign banks in Taiwan were also seen buying U.S. dollars, another dealer at a local bank said.
In the non-deliverable forwards market, the six-month NDFs narrowed to -0.325/-0.275 from -0.440/-0.390 in the previous session, meaning investors saw the Taiwan dollar gaining less over the next six months.
Since rallying to a 10-1/2-year high in late March on expectations of improving relations with China, the Taiwan dollar has lost about 9 percent, mainly due to fund outflows.
On the smaller Cosmos exchange , the Taiwan dollar weakened to T$32.715 to the U.S. dollar from the previous close of T$32.580.
(Reporting by Gina Chang and Lin Miao-jung; Editing by Kazunori Takada)
((ralph.jennings@thomsonreuters.com; +886 2 2508-0815; Reuters
Messaging: ralph.jennings.reuters.com@reuters.net))
Keywords: MARKETS TAIWAN CURRENCY/

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Tuesday, 21 October 2008 17:32:46RTRS [nTP346363] {EN}ENDS