tw dlr 0105

16:57 05Jan2009 RTRS-Taiwan dlr eases to 1-wk closing low, c.bank seen

(Updates to close)
TAIPEI, Jan 5 (Reuters) - The Taiwan dollar eased to more
than a one-week closing low on Monday, its first session of 2009,
as investors covered short positions in the U.S. dollar and the
central bank sold the local currency to limit rises.
The Taiwan dollar closed at T$33.005 to the U.S.
dollar, weakening from T$32.860 on Wednesday and hitting its
weakest closing price since Dec. 26. Taiwan's markets were closed
on Thursday and Friday for the New Year.
Volume on the main Taipei Forex Inc. was $1.136 billion,
higher than $817 million on Wednesday.
"The rate has been very stagnant today," a dealer in Taipei
said. "The central bank doesn't want the Taiwan dollar to get too
strong, so they sold currency."
The U.S. dollar held firm near a three-week high against the
yen on Monday as investor risk appetite grew after Tokyo shares
followed Wall Street higher on optimism the U.S. economy will
turn around in the second half of the year.
U.S. stocks rallied on Friday on hopes of a new economic
stimulus package from President-elect Barack Obama.
But as exporters came out in force to buy the relatively weak
Taiwan dollar at favourable rates for cash needs at home and
foreign funds sought the currency to buy local stocks, the
island's central bank stepped in to stop the currency from
strengthening, dealers said.
Foreign funds bought T$4.141 billion ($125.5 million) in
Taiwan stocks, which were up 2.33 percent, on Monday.
The central bank keeps the local currency in a managed float
and sometimes intervenes in the market to prevent massive
fluctuations in the Taiwan dollar. It seeks to keep local
currency gains in check to help maintain export competitiveness.
In a Reuters poll conducted in December, dealers and
economists expected the Taiwan dollar to trade weaker at T$34.6
in the middle of 2009 and T$34.0 by the end of the year.
Weakening export figures will be a key factor that could push the
Taiwan dollar lower.
On the smaller Cosmos exchange , the Taiwan dollar
closed at T$33.003 against the U.S. dollar, weaker than
Wednesday's final price of T$32.776.
(Reporting by Ralph Jennings and Yvette Chen, Editing by
Jacqueline Wong)
((ralph.jennings@thomsonreuters.com; +886 2 2508-0815; Reuters
Messaging: ralph.jennings.reuters.com@reuters.net))
Keywords: MARKETS TAIWAN/CURRENCY

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Monday, 05 January 2009 16:57:45RTRS [nTP362764] {EN}ENDS