TWD 10 Nov

16:53 10Nov2008 RTRS-Taiwan dollar ends flat after interest rate cut

(Updates to close)
TAIPEI, Nov 10 (Reuters) - The Taiwan dollar ended flat on Monday in thin trade as a surprise interest rate cut by the central bank failed to boost sentiment due to fears of a global recession threatening the domestic economy.
The Taiwan dollar, which has been trending higher over the past week underpinned by the government's efforts to prop up the economy, gave up earlier gains to close at T$32.823 to the U.S. dollar, barely changed from Friday's T$32.824.
"The rate cut should supposedly boost the stock market, but local stocks fell instead. That confused investors and made them stay on the sidelines," a dealer said.
Volume on the main Taipei Forex Inc exchange shrank to a low of $608 million from Friday's $789 million, as investors mostly waited for more market-moving factors.
Taiwan's central bank unexpectedly cut interest rates by 25 basis points on Sunday, its fourth reduction in just over a month as fears of a global recession threatened the island's export-led economy. [ID:nTP69671]
Taiwan stocks <.TWII> closed slightly lower on Monday, dragged down by declines in technology shares. The market failed to find support from the rate cut afte Friday's weak October export numbers posted their biggest annual fall in 3-½ years. [ID:nTP217910]
Dealers said the central bank, which keeps the Taiwan dollar in a managed float, sold the local currency at around T$32.760-T$32.750 to prevent it from gaining too much.
There was little clear direction from foreign fund movements.
"Some foreign banks sold the U.S. dollar in the morning, but later bought back the greenback," said another dealer.
Although the Taiwan dollar gained on Monday, it has lost about 9 percent since hitting a 10-1/2-year high in late March due to fund outflows.
On the smaller Cosmos exchange , the Taiwan dollar fell to T$32.820 to the U.S. dollar, from the previous close of T$32.816.
(Reporting by Gina Chang and Yvette Chen, Editing by Jacqueline Wong)
((chyenyee.lee@thomsonreuters.com; +886 2 2508-0815; Reuters Messaging: chyenyee.lee.reuters.com@reuters.net)) Keywords: MARKETS TAIWAN CURRENCY/

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Monday, 10 November 2008 16:53:15RTRS [nTP112960] {EN}ENDS