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17:32 19Feb09 RTRS-Taiwan dollar at 5-1/2-yr low, more weakness seen
(Updates to close)
TAIPEI, Feb 19 (Reuters) - The Taiwan dollar hovered at a 5-1/2-year low on Thursday as investors unloaded the local currency following a record GDP decline and an interest rate cut, while expecting further depreciation.
The Taiwan dollar , which has been weakening over the past two weeks, opened higher at T$34.600 but quickly fell back and closed at T$34.675, its weakest finish since June 11, 2003.
Volume on the main Taipei Forex Inc exchange was thin at $730 million, lower than Wednesday's $838 million.
"There wasn't a clear direction in the Taiwan dollar today, but the central bank did intervene to weaken it further, probably in response to how much the South Korean won fell today," said a dealer in Taipei.
The central bank, which controls the Taiwan dollar in a managed float, has been intervening in the foreign exchange market to help the island's exporters after the economy shrank at a record annual pace of more than 8 percent in the fourth quarter.
However, dealers cautioned that the Taiwan dollar could weaken further in the coming days, and would probably only find support at around T$35 to the U.S. dollar.
"The T$35 level is key because that's when exporters will probably start selling their U.S. dollar holdings, thus pushing the Taiwan dollar up in the process," another dealer said.
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 smaller Cosmos exchange , the Taiwan dollar was trading for T$34.663, compared with Wednesday's close of T$34.605.
(Reporting by Kelvin Soh and Lin Miao-jung, Editing by Jacqueline Wong)
((kelvin.soh@thomsonreuters.com; +886 2 2508 0815; Reuters Messaging: kelvin.soh.reuters.com@reuters.com)) Keywords: MARKETS TAIWAN CURRENCY/


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Thursday, 19 February 2009 17:32:23RTRS [nTP310914] {EN}ENDS