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17:17 09Feb2009 RTRS-Taiwan dollar falls to 4-1/2-yr low on c.bank move

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TAIPEI, Feb 9 (Reuters) - The Taiwan dollar slid for a third straight session on Monday to close at its lowest level in 4-½ years, as foreign fund inflows that kept the local currency in positive territory were wiped out by the central bank's last-minute intervention, dealers said.
The Taiwan dollar rose to as high as T$33.602 to the U.S. dollar by midday, but gave up the gains to hit T$33.961 as the market ended, weaker than Friday's close of T$33.750.
Volume on the main Taipei Forex Inc exchange was thin at $885 million, but higher than Friday's $744 million.
The central bank's move came moments after Taiwan's government said the island's exports in January slumped by their steepest decline on record as the global downturn sapped demand from its key trading partners. [ID:nTP157850]
"The central bank moves were clearly related to the weak trade figures. Although these were within expectations, it's still a bad figure," said a dealer in Taipei.
"The market will now be cautious, and the Taiwan dollar may not rise as much as it would otherwise have."
Taiwan's central bank, which keeps the Taiwan dollar in a managed float, sometimes intervenes in the foreign exchange market to allow the local currency to weaken, helping the island's exporters compete with their Asian peers.
However, dealers said the Taiwan dollar could still strengthen in the coming days, especially if Taiwan stocks <.TWII> continue their upward trek.
"Some investors seem to be a little more daring these days, especially with all this talk about the U.S. economic stimulus package, and that's leading to some outflows from their U.S. dollar holdings," said another dealer.
Increased investor risk appetite typically leads to an outflow from safe havens such as the U.S. dollar, and could push the local currency up.
On the smaller Cosmos exchange , the Taiwan dollar closed at T$33.673 to the U.S. dollar, stronger than Friday's close of T$33.710.
(Reporting by Kelvin Soh and Yvette Chen, 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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Monday, 09 February 2009 17:17:07RTRS [nTP182898] {EN}ENDS