TWD 5 Nov

16:57 05Nov2008 RTRS-Taiwan dlr extends gains on exporters, China ties

(Updates to close)
TAIPEI, Nov 5 (Reuters) - The Taiwan dollar rose on Wednesday on exporters' purchases of the local dollar, but gave up some early gains fuelled by rising local stocks after Taiwan and China agreed to discussions on opening up their financial industries.
The Taiwan dollar rose by as much as T$0.201 to T$32.668 against the U.S. dollar shortly after the open. It gave up some of its gains to end at T$32.830, still up from Tuesday's T$32.869.
Volume on the main Taipei Forex Inc exchange was moderate at $1.239 billion, higher than $808 million a day earlier.
"The cross-Strait agreement and the outcome of the U.S. presidential election more or less boosted the Taiwan dollar," said one dealer at a local bank.
"However, the local currency was mainly tracking the stock market movement. The currency gave up some gains after domestic stocks ended lower."
Taiwan stocks <.TWII> gave up early gains to end 0.29 percent lower on Wednesday, weighed down by tech shares but supported by financials after the island and China agreed to discussions on opening up their financial industries.
Exporters' purchases helped the Taiwan dollar gain, said another dealer in Taipei.
Exporters prefer a weaker Taiwan dollar to convert their U.S. dollar earnings to more of the local currency.
The Taiwan dollar was also seen gaining strength in the non-deliverable forwards market, with six-month NDFs widening to -0.470/-0.420 from -0.440/-0.370 in the previous session, showing the local currency will likely firm more in six months.
Although local stocks lost steam to finish lower on Wednesday, foreign institutions bought T$1.3 billion ($40 million) worth of local shares.
The central bank also stepped in to curb the Taiwan dollar's rise, dealers said.
The central bank, which keeps the Taiwan dollar in a managed float, usually buys and sells U.S. dollars to prevent big swings in the local currency.
On the smaller Cosmos exchange , the Taiwan dollar rose to T$32.818 to the U.S. dollar, from the previous close of T$32.915.
(Reporting by Gina Chang, 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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Wednesday, 05 November 2008 16:57:22RTRS [nTP353844] {EN}ENDS