TWD 1215

16:42 15Dec2008 RTRS-Taiwan dlr at one-mth high on China transport ties

(Updates to close)
TAIPEI, Dec 15 (Reuters) - The Taiwan dollar ended at a one-month closing high on Monday, as the launch of direct transport links between Taiwan and China boosted sentiment in financial markets.
The Taiwan dollar finished at T$33.199 to the U.S. dollar, its strongest close since Nov. 17, up from Friday's finish of T$33.315.
Volume on the Taipei Forex Inc. exchange was light at $763 million, lower than $995 in the previous session.
The Taiwan dollar tracked strong gains in the stock market, which was buoyed as China and Taiwan launched landmark daily flights, new shipping routes and postal links on Monday.
"If the stock market continued to move steadily, the local currency will likely trend higher in the short term and test as high as T$33.00," said a dealer in Taipei.
"There were some foreign fund inflows, but the amount was not particularly large," he said.
Taiwan stocks <.TWII> ended 2.96 percent higher, with foreign institutions buying T$6 billion ($181 million) worth of local shares, bringing their net buying to T$10.7 billion so far this month.
Exporters' deals added further support to the local currency. Exporters, which prefer a weaker Taiwan dollar so they can convert their U.S. dollar earnings to more of the local currency, bought the Taiwan dollar before it rose too much.
"The central bank intervened in early trade, but was not seen in late trading, triggering more incentive to buy the Taiwan dollar," the dealer said.
The central bank, which slashed interest rates last week, prefers the Taiwan dollar to be relatively weak since the island's exports have been slumping. A weaker Taiwan dollar will help make Taiwan's exports more attractive.
In the non-deliverable forwards market, six-month NDFs widened to -0.300/-0.240 from -0.120/-0.060 in the previous session, indicating the Taiwan dollar will probably strengthen more than previous expectations.
On the smaller Cosmos exchange , the Taiwan dollar rose to T$33.195 to the U.S. dollar from Friday's close of T$33.308.
(Reporting by Gina Chang and Yvette Chen; Editing by Keiron Henderson)
((gina.chang@thomsonreuters.com; +886 2 2508-0815; Reuters Messaging:gina.chang.thomsonreuters.come@reuters.com)) Keywords: MARKETS TAIWAN CURRENCY/

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Monday, 15 December 2008 16:42:42RTRS [nTP163142] {EN}ENDS