stock 1211

17:19 11Dec2008 RTRS-Taiwan dlr at 2-wk high on foreign funds, eyes cbank

(Updates closing values, adds details, quotes)
TAIPEI, Dec 11 (Reuters) - The Taiwan dollar rose to a near two-week closing high on Thursday as foreign funds shifted their funds into the local stock market on hopes easier monetary policy will bolster the economy.
Investors' risk appetites rose on expectations of more economic stimulus measures from the authorities, including lower interest rates, which pushed down traditional safe havens such as the U.S. dollar.
The Taiwan dollar rose to an intraday high of T$33.294 but later pared gains to close the day at T$33.309, its highest level since Nov. 28 and higher than Wednesday's close of T$33.449.
Trading on the Taipei Forex Inc exchange was moderate at $972 million, higher than Wednesday's $797 million and other December trading days.
"Foreign funds were the main drivers today as they have been doing the past few days," said a dealer in Taipei.
"Yields on U.S. dollar holdings are very low now and I think many of them are looking for a better place to put their money."
Foreign institutions were net buyers of Taiwan stocks for the fourth straight session, with T$7.991 billion ($239 million) of net foreign funds flowing into the market.
Taiwan's central bank cut interest rates by 75 basis points to 2 percent after the market closed, which was more than expected.
A Reuters poll on Tuesday showed most analysts expected the central bank to cut the benchmark discount rate of 2.75 percent by 50 basis points. [ID:nTP358035]
Dealers also said there were exporters scouring the market for Taiwan dollars, as they feared lower volumes heading into the Christmas season and were bracing for a stronger local currency in coming weeks.
Exporters generally prefer a weaker Taiwan dollar as it allows them to get more of the local currency for every U.S. dollar.
On the smaller Cosmos exchange , the Taiwan dollar rose to T$33.294 from the previous close of T$33.430.
(Reporting by Kelvin Soh and Yvette Chen, Editing by Jacqueline Wong)
((kelvin.soh@thomsonreuters.com; +886 2 2508-0815; Reuters Messaging:kelvin.soh.reuters.com@reuters.net)) Keywords: MARKETS TAIWAN CURRENCY/

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Thursday, 11 December 2008 17:19:42RTRS [nTP102280] {EN}ENDS