TWD 22Oct

16:50 22Oct2008 RTRS-Taiwan dlr hits 13-mth low on US dlr rally, banks

(Updates to close)
TAIPEI, Oct 22 (Reuters) - The Taiwan dollar fell on Wednesday to a 13-month closing low as the U.S. dollar gained globally and foreign banks bought the U.S. unit, despite exporter purchases of the local currency.
The Taiwan dollar closed at the day's low of T$32.990 to the U.S. dollar, its weakest finish since Sept. 20, 2007. The Taiwan dollar ended at T$32.697 in the previous session.
Volume on the main Taipei Forex Inc was moderate at $1.126 billion, up from $883 million a day earlier.
"Currencies worldwide such as the euro, Asian dollars and sterling all weakened against the U.S. dollar. The Taiwan dollar's fall was relatively small compared with other currencies' losses," said a dealer at a local bank.
However, exporters bought the U.S. dollar during the session, which helped limit the local currency's drop, the dealer said.
Exporters prefer a weaker Taiwan dollar so they can convert their U.S. dollar earnings to more of the Taiwan dollar for cash needs at home.
"The central bank also intervened during trade, but wasn't active," said the dealer.
The U.S. dollar jumped to a 21-month high against a basket of currencies on Wednesday as investors bet that interest rates outside the United States will be cut sharply to try to bolster global growth. [ID:nT312299]
Foreign banks also bought a lot of U.S. dollars, pressuring the Taiwan dollar, said another dealer.
In the non-deliverable forwards market, six-month NDFs narrowed to -0.250/-0.200 from -0.325/-0.275, indicating that investors saw the Taiwan dollar strengthening by a lesser degree in half a year.
The Taiwan dollar has fallen 10 percent since rallying to a 10-1/2-year high in late March on the prospect of better cross-Strait relations under China-friendly President Ma Ying-jeou.
On the smaller Cosmos exchange , the Taiwan dollar weakened to T$32.990 to the U.S. dollar from the previous close of T$32.715.
(Reporting by Gina Chang and Yvette Chen; Editing by Jonathan Hopfner)
((miaojung.lin@thomsonreuters.com; +886 2 2508-0815; Reuters Messaging: miaojung.lin.reuters.com@reuters.net))
Keywords: MARKETS TAIWAN CURRENCY/

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Wednesday, 22 October 2008 16:50:11RTRS [nTP341342] {EN}ENDS