TWD 21 Nov

16:43 21Nov2008 RTRS-Taiwan dollar off 1-mth low on local stock rally

(Updates to close)
TAIPEI, Nov 21 (Reuters) - The Taiwan dollar reversed its early course to end higher on Friday, as market sentiment was boosted by a strong rebound in domestic stocks, ignoring dismal economic figures that sparked recession fears.
The Taiwan dollar hit a low of T$33.550 to the U.S. dollar in early trade, its weakest intraday level since Oct. 28, but pulled back after the lunch break to end at T$33.388, higher than Thursday's close of T$33.405.
Volume on the main Taipei Forex Inc exchange was moderate at $976 million, compared with $1.078 billion a day earlier.
"Foreign banks were buying the U.S. dollar at first, but turned to sell the greenback after the stock market rebounded," said a dealer at a local bank.
Taiwan stocks <.TWII> recouped sharp losses in morning trade to close 1.98 percent higher on Friday, as investors scoured the market for beaten down stocks like Hon Hai <2317.TW> and Asustek <2357.TW>.
Positive sentiment in the stock market offset weak GDP figures announced by the government on Thursday, which showed Taiwan's economy unexpectedly shrank in the third quarter from a year earlier, the biggest drop in seven years. [ID:nTP71548]
The Taiwan dollar was further supported by exporters' deals and central bank intervention, dealers said. Exporters prefer a weaker dollar so they can convert U.S. dollar earnings to more of the local currency.
The Taiwan dollar, which is expected to be on a downward trend through the end of the year, may have limited losses next week as more exporters will buy the local currency for cash needs at home near the end of the month, the first dealer said.
In the non-deliverable forwards market, six-month NDFs widened to -0.190/-0.140 from -0.110/-0.060 in the previous session, implying the Taiwan dollar will likely firm by a larger degree in half a year.
On the smaller Cosmos exchange , the Taiwan dollar firmed to T$33.390 to the U.S. dollar, from the previous close of T$33.407.
(Reporting by Gina Chang and Lin Miao-jung; Editing by Jonathan Hopfner)
((gina.chang@thomsonreuters.com; +886 2 2508-0815; Reuters Messaging: gina.chang.thomsonreuters.com@reuters.net))
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Friday, 21 November 2008 16:43:51RTRS [nTP7550] {EN}ENDS