twn dlr 0312

16:48 12Mar09 RTRS-Taiwan dollar extends 3-wk high, c.bank curbs rise (Adds details, quotes) TAIPEI, March 12 (Reuters) - The Taiwan dollar rose for a third straight day to a three-week closing high on Thursday on foreign fund inflows, although central bank intervention kept any larger gains in check. The Taiwan dollar rose to an intraday high of T$34.432 in morning trade, but later pared some of those gains to close the session at T$34.494, its strongest close since Feb. 16. That was also stronger than Wednesday's close of T$34.515. Volume on the main Taipei Forex Inc exchange was moderate at $851 million, less than half of Wednesday's active $1.74 billion. "The Taiwan dollar was trading within a very limited range today, and it became quite clear by mid-morning this was roughly the range in which the central bank wanted it to trade within," said a dealer in Taipei. The central bank, which keeps the Taiwan dollar in a managed float, intervened by buying U.S. dollars on Wednesday to temper massive gains in the local currency, and was responsible for half or more of the trading volume on the main exchange, dealers said. [ID:nTP15476] On Thursday, Central Bank Governor Perng Fai-nan said the central bank was ready to enter the market to prevent huge fluctuations in the Taiwan dollar. Foreign fund inflows provided for most of the Taiwan dollar's support, but dealers said they expect this to pare off in the coming days as volumes fall ahead of the Federal Reserve's rate-setting meeting next week. "We're already seeing an increase in the number of bystanders, and this could gradually increase in the coming days when the Fed's meeting draws closer," said another dealer. The Federal Reserve will likely keep interest rates low well into 2010 and possibly longer, a Reuters poll showed last week, even though the recession is seen as likely to end later this year. [ID:nAT004799] On the smaller Cosmos exchange , the Taiwan dollar closed at T$34.486, inching up from Wednesday's close of T$34.495. (Reporting by Kelvin Soh and Yvette Chen; Editing by Ken Wills) ((kelvin.soh@thomsonreuters.com; +886 2 2508 0815; Reuters Messaging: kelvin.soh.reuters.com@reuters.com)) Keywords: MARKETS TAIWAN CURRENCY/
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