twd 1209

17:41 09Dec2008 RTRS-Taiwan dollar weakens on rate cut expectations

(Updates closing numbers; Adds details quotes)
TAIPEI, Dec 9 (Reuters) - The Taiwan dollar reversed early gains to close weaker on Tuesday as the market factored in the risk of a big rate cut this week by the central bank after dismal export data.
The Taiwan dollar rose to an intraday high of T$33.460 in early trade, its highest level since Dec. 3. However, it gave up the gains to close lower at T$33.546, against the previous day's close of T$33.490.
Trading on the Taipei Forex Inc. exchange was thin at $675 million, but higher than Monday's $636 million. Volume has been decreasing in the past few weeks ahead of the year-end holiday season.
"We had a lot of foreign funds buying U.S. dollars today, although the stock market was climbing," said a dealer.
Taiwan's exports in November fell by 23 percent from a year earlier, the sharpest decline in seven years, underlining expectations that the economy could slip into recession. [ID:nTP355056]
A Reuters poll on Tuesday showed most analysts expect the central bank to cut the benchmark discount rate of 2.75 percent by 50 basis points, the biggest cut in seven years. [ID:nTP358035]
"Any rate cut of between 25 to 50 basis points is within expectations, and what is interesting would be to see any announcement they may make after the meeting," said another dealer.
On the non-deliverable forwards (NDFs) market, six-month NDFs narrowed to -0.050/0.000 from the previous close of -0.100/-0.050, meaning investors expect the Taiwan dollar to firm less than previously thought.
On the smaller Cosmos exchange , the Taiwan dollar weakened to T$33.530 from the previous close of T$33.518.
(Reporting by Kelvin Soh and Jeanny Kao; Editing by Neil Fullick)
((kelvin.soh@thomsonreuters.com; +886 2 2508-0815; Reuters Messaging:kelvin.soh.reuters.com@reuters.net))
Keywords: MARKETS TAIWAN CURRENCY/

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Tuesday, 09 December 2008 17:41:54RTRS [nTP31381] {EN}ENDS