TWD 1210

16:36 10Dec2008 RTRS-Taiwan dollar at 1-½ week high on foreign funds

(Updates with close, quotes)
TAIPEI, Dec 10 (Reuters) - The Taiwan dollar rose to a 1-½ week closing high on Wednesday as foreign funds unloaded U.S. dollars to buy into a surging domestic stock market, while exporter deals further pushed up the local currency.
The Taiwan dollar rose to a high of T$33.430 during trade, but later pared some of the gains to close the session at T$33.449, its highest close since Dec. 1. The local currency finished at T$33.546 on Tuesday.
Trading on the Taipei Forex Inc exchange was thin at $797 million, but higher than Tuesday's level of $675 million.
"There was hardly anyone buying U.S. dollars today. Everyone wanted to buy Taiwan dollars instead," said a dealer in Taipei.
"Foreign funds were buying Taiwan dollars to invest in the stock market, while exporters were buying ahead of the Christmas season."
Foreign institutions were net buyers of Taiwan stocks for the third straight session, with T$8.973 billion ($268 million) of net foreign funds flowing into the market.
Dealers also eyed a meeting by the central bank on Thursday, but they said any potential gains from an interest rate cut had already been factored into the market.
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, which would be the biggest cut in seven years. [ID:nTP358035]
The move was aimed at propping up the tech and export-reliant economy suffering from a global downturn, which helped support the local currency.
On the non-deliverable forwards (NDFs) market, six-month NDFs were quoted at -0.150/-0.080 compared with Tuesday's close of -0.050/0.000, meaning investors expect the Taiwan dollar to firm more than previously thought.
On the smaller Cosmos exchange , the Taiwan dollar rose to T$33.430 from the previous close of T$33.530.
(Reporting by Kelvin Soh and Yvette Chen; Editing by Ken Wills)
((kelvin.soh@thomsonreuters.com; +886 2 2508-0815; Reuters Messaging:kelvin.soh.reuters.com@reuters.net)) Keywords: MARKETS TAIWAN CURRENCY/

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Wednesday, 10 December 2008 16:36:14RTRS [nTP56587] {EN}ENDS