twd 1212

16:39 12Dec2008 RTRS-Taiwan dollar off 2-week high on failed auto bailout

(Updates with close)
TAIPEI, Dec 12 (Reuters) - The Taiwan dollar pulled back from its two-week high on Friday on foreign fund outflows, as fears of a worsening economy returned to haunt investors after a bailout package for the U.S. auto sector stalled.
The Taiwan dollar had risen to as high as T$33.209 to the U.S. doillar, its strongest intraday level since Nov. 27, after the central bank's biggest rate cut in 26 years raised hopes that the economy might improve.
It later reversed those gains to close at T$33.315, lower than Thursday's close of T$33.309.
Volume on the Taipei Forex Inc. exchange was moderate at $995 million, higher than Thursday's $972 million.
"The Taiwan dollar was rising all morning, but when news on the auto bailout failure was released, everything just went downhill from there," said a dealer in Taipei.
Foreign institutions were net sellers of Taiwan stocks for the first time in five sessions, unloading T$4.558 billion ($137 million) worth of shares on Friday.
Taiwan stocks posted their biggest slide in three weeks on Friday, led by a sell-off in heavyweight shares.
Dealers said exporters were also scouring the market for much of the day, looking for deals before the expected low volumes ahead of the Christmas season, which could push up the local currency in the absence of U.S. dollar buyers.
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 non-deliverable forwards (NDFs) market, six-month NDFs were quoted at -0.120/-0.060 compared to Thursday's -0.260/-0.220, meaning investors expect the Taiwan dollar to firm less than previously thought.
On the smaller Cosmos exchange , the Taiwan dollar fell to T$33.308 from Thursday's close of T$33.294.
(Reporting by Kelvin Soh and Yvette Chen; Editing by Nick Macfie)
((kelvin.soh@thomsonreuters.com; +886 2 2508-0815; Reuters Messaging:kelvin.soh.reuters.com@reuters.net)) Keywords: MARKETS TAIWAN CURRENCY/

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Friday, 12 December 2008 16:39:04RTRS [nTP126520] {EN}ENDS