TWD 01 Dec

16:43 01Dec2008 RTRS-Taiwan dollar weakens on foreign funds, yuan

(Updates to close)
TAIPEI, Dec 1 (Reuters) - The Taiwan dollar weakened on Monday on foreign fund outflows and a sharp slide in the Chinese yuan, although trade was thin as market watchers awaited the direction of U.S. stocks and local economic data later in the week.
The Taiwan dollar fell to T$33.350 to the U.S. dollar from the previous close of T$33.295. Volume on the Taipei Forex Inc. exchange was light at $675 million, but up from $627 million on Friday.
"Some foreign institutions went long on the U.S. dollar because the weakening of the yuan is quite a determining factor for Asian currencies today," a dealer in Taipei said.
The yuan fell sharply against the U.S. dollar in the spot and offshore forwards markets, as dealers speculated that China might adjust foreign exchange policy to stimulate its economy, a move that would permit more yuan weakness.
While foreign funds bought U.S. dollars in Taiwan, local banks bought Taiwan dollars as the stock market rose for most of the session and ended 1.3 percent higher, dealers said.
Dealers said the market also was awaiting more economic data abroad and at home to get a clearer direction of where the Taiwan dollar is headed.
In Taiwan, the government is due to announce November's forex reserves and inflation data on Friday and exports next week.
Dealers said they expected the Taiwan dollar to trade between T$33.200-T$33.500 in coming sessions.
In the non-deliverable forwards (NDFs) market, six-month NDFs were quoted at -0.100/-0.050, compared with -0.180/-0.120 in the previous session, meaning investors expected the Taiwan dollar to firm less than earlier expectations.
On the smaller Cosmos exchange , the Taiwan dollar fell to T$33.349 to the U.S. dollar from the previous close of T$33.285.
(Reporting by Ralph Jennings and Lin Miao-jung; Editing by Anne Marie Roantree)
((ralph.jennings@thomsonreuters.com; +886 2 2508-0815; Reuters Messaging: ralph.jennings.reuters.com@reuters.net)) Keywords: MARKETS TAIWAN CURRENCY/

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Monday, 01 December 2008 16:43:15RTRS [nTP210439] {EN}ENDS