TWD 20 Nov

17:04 20Nov2008 RTRS-Taiwan dlr at 3-wk low ahead of GDP numbers

(Updates to close)
TAIPEI, Nov 20 (Reuters) - The Taiwan dollar fell on Thursday to a more than three-week closing low as a drop in the stock market dampened sentiment and triggered foreign fund outflows ahead of the official release of dismal GDP figures.
The Taiwan dollar, which fell for a fourth straight session, hit a low of T$33.439 to the U.S. dollar in late trade, but recouped some losses to end at T$33.405, its lowest close since Oct. 28. It finished at T$33.265 in the previous session.
Volume on the main Taipei Forex Inc exchange was moderate at $1.078 billion, twice the $532 million total from a day earlier.
"Losses on Wall Street and local stocks all helped push the Taiwan dollar sharply lower," said a dealer at a local bank.
"Foreign banks bought a lot of U.S. dollars and there probably were fund outflows," he said, adding that the local currency could go as low as T$33.8 next week if global stock markets continue to fare badly.
Taiwan stocks <.TWII> weighed on the currency, ending down 4.53 percent on Thursday to a more than six-year closing low.
Foreign institutions sold a net T$6 billion ($180 million) worth of Taiwan shares on Thursday, bringing their net sales to a total of T$516 billion so far since June.
The market is expected to react on Friday to reports from Taiwan statistics agency sources that GDP growth was down 1.02 percent in the third quarter.
"The market in general thinks the figures will be bad, and if they are worse than expectations, the Taiwan dollar will trade lower tomorrow," said the dealer.
"The central bank could probably further cut the interest rates by about 1 percent, but it's still not certain what measure the central bank will take before the figures are out."
Taiwan's benchmark discount rate stands at 2.75 percent. The central bank unexpectedly cut the rate by 25 basis points earlier in November, its fourth cut in just over a month.
In the non-deliverable forwards market, six-month NDFs were quoted at -0.110/-0.060, narrower than -0.180/-0.130 in the previous session. That indicated the Taiwan dollar was likely to strengthen by a smaller margin in half a year.
However, falls in the Taiwan dollar were limited as exporters bought the local currency at around T$33.4 and the central bank stepped in to prevent the Taiwan dollar from changing dramatically.
Exporters prefer a weaker Taiwan dollar so they can exchange U.S. dollar earnings to more of the local currency.
The Taiwan dollar has fallen about 11 percent since rallying to a 10-1/2-year high in late March, when investors bet on improving cross-Strait relations under China-friendly President Ma Ying-jeou.
On the smaller Cosmos exchange , the Taiwan dollar softened to T$33.407 to the U.S. dollar, from the previous close of T$33.258.
(Reporting by Gina Chang and Lin Miao-jung; Editing By Keiron Henderson)
((chyenyee.lee@thomsonreuters.com; +886 2 2508-0815; Reuters Messaging: chyenyee.lee.reuters.com@reuters.net))
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Thursday, 20 November 2008 17:04:19RTRS [nTP336507] {EN}ENDS