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16:48 03Feb2009 RTRS-Taiwan dollar firms on exporter deals, fund inflows

(Updates closing values, adds details)
TAIPEI, Feb 3 (Reuters) - The Taiwan dollar rose for a second day on Tuesday on exporters' deals and were further supported by some foreign funds investing in the local equity market.
The Taiwan dollar rose to an intraday high of T$33.620, but later pared some of those gains to close at T$33.720, further pulling away from a four-year low hit on Jan. 23.
On Monday, the Taiwan dollar closed at T$33.749.
Volume on the main Taipei Forex Inc exchange was thin at $834 million, but higher than Monday's $509 million.
"Foreign funds and exporters fuelled much of the local currency's rise today, but gains were limited after the stock market began pulling back," said a dealer in Taipei.
"The central bank also stepped in to control the rise of the Taiwan dollar, so it lost some of its value later, closer to the end of trade."
The Taiwan dollar has lost 2.5 percent since the beginning of this year due to worries over the global downturn and the central bank's preference to allow the currency to weaken to maintain Taiwan's export competitiveness.
"Everyone knows the central bank wants the Taiwan dollar to fall," said another dealer, who expects the currency to test the T$34 level in the short term.
"However, it's not going to fall by 20 cents every day. There'll be fluctuations and it will not fall in a straight line. We'd have streets full of millionaires if things were so simple."
On the smaller Cosmos exchange , the Taiwan dollar also closed higher at T$33.690 to the U.S. dollar, compared to its previous close of T$33.745.
(Reporting by Kelvin Soh and Jeanny Kao; Editing by Nick Macfie)
((kelvin.soh@thomsonreuters.com; +886 2 2508 0815; Reuters Messaging: kelvin.soh.reuters.com@reuters.com)) Keywords: MARKETS TAIWAN CURRENCY/

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Tuesday, 03 February 2009 16:48:38RTRS [nTP338909] {EN}ENDS