twd 1219

17:07 19Dec2008 RTRS-Taiwan dlr off 2-mth high on US dlr strength

(Updates to close)
TAIPEI, Dec 19 (Reuters) - The Taiwan dollar softened on Friday, weighed by a rebound in the U.S. dollar globally and selling by foreign investors, as investors locked in profits after the local currency rose sharply in previous sessions.
The Taiwan dollar ended at T$32.53 to the U.S. dollar, ending strong gains in the previous four sessions that pushed the local currency to a two-month high. It finished at T$32.471 a day earlier.
Volume on the main Taipei Forex Inc exchange was light at $745 million, sharply lower than Thursday's $1.713 billion.
"The U.S. dollar bounced, pressuring some Asian currencies lower, such as the Singapore dollar ," said a dealer in Taipei.
The dealer said the Taiwan dollar would not keep rising due to a weak local economy but might rebound in the short term as the U.S. dollar continued weakening. What the central bank would do would be key to the currency's movement, she added.
Taiwan's central bank keeps the Taiwan dollar in a managed float and usually buys and sells U.S. dollars in the market to curb huge swings in the local currency.
"Some investors were taking profits in the non-deliverable forwards market. Foreign investors also sold the Taiwan dollar," said another dealer at a local bank.
In the non-deliverable forwards market, six-month NDFs were quoted at -0.370/-0.320, versus than -0.380/-0.330 in the previous session, implying the Taiwan dollar will likely gain by a lesser degree in the next six months.
Although the Taiwan dollar weakened on Friday, it has climbed 2.4 percent this week after the U.S. Federal Reserve slashed rates to as low as zero, sparking worries the stronger Taiwan dollar would hurt exporter competitiveness in the current global downturn.
On the smaller Cosmos exchange , the Taiwan dollar weakened to T$32.523 from the previous close of T$32.461.
(Reporting by Yvette Chen and Gina Chang; 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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Friday, 19 December 2008 17:07:48RTRS [nTP298172] {EN}ENDS