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16:59 30Apr09 RTRS-Taiwan dollar near 4-month high on US economy, China * Taiwan dollar rises 1.3 percent, biggest gain since October * Warming ties between China and Taiwan boost sentiment * Volume of $3.84 billion second highest in market's history (Updates to close) By Ralph Jennings TAIPEI, April 30 (Reuters) - The Taiwan dollar surged to a near four-month high on Thursday as the island's financial markets cheered stonger trade ties with political rival China and evidence that the U.S. economy is recovering. The Taiwan dollar strengthened for a second straight day and closed at T$33.233 to the U.S. dollar, the strongest finish since Jan. 9 and 1.3 percent higher than the previous close of T$33.658, the biggest jump since October. The local currency hit an intraday high of $33.057 before rapidly paring gains in the final minutes of trade due to the central bank's U.S. dollar buying intervention. "It's a mostly because of the step in strengthening relations between China and Taiwan," said Craig Chan, a forex analyst at Nomura Securities in Singapore. "The whole of Asia has rallied, too, so that's some support for the Taiwan dollar." The Taiwan dollar followed the trend of other currencies in Asia. The South Korean won posted its best gain in six months, while the Malaysian ringgit hit a three-week high on optimism that the global slump could be easing. CHINA OPTIMISM Despite Thursday's strong gains, the Taiwan dollar has lost 1.1 percent since the beginning of the year as worries over the global economy weighed on sentiment. Taiwan stocks <.TWII>, tracking markets elsehwere in Asia, climbed 6.74 percent on the U.S. Federal Reserve's comments saying that the U.S. recession appeared to be easing. Two major corporate tie-ups between China and Taiwan further boosted sentiment following weekend negotiations between the two sides on liberalising investment and financial services. Foreign institutions bought a net T$32.99 billion ($997 million) worth of Taiwan stocks on Thursday, the fifth-biggest daily foreign purchase on record, after the share market logged its best gain in 18 years. That brought total net purchases by foreign institutions in the stock market to T$104 billion for April. Volume on the main Taipei Forex Inc exchange was a massive $3.840 billion, the second largest in its history and compared to $959 million on Wednesday. Dealers said exporters were also selling U.S. dollars in the market to meet cash needs at the end of the month, though some were waiting for the Taiwan dollar to fall back so that they can convert into more of the local currency. In the non-deliverable forwards market, six-month NDFs were quoted at -0.890/-0.820, compared with -0.410/-0.360 in the previous session, meaning that the market was expecting the Taiwan dollar to firm by a larger degree in half a year. Taiwan's central bank, which keeps the currency in a managed float, bought U.S. dollars on Thursday to curb the Taiwan dollar's gains, dealers said. Taiwan markets will be closed on Friday for the Labour Day holiday and will resume trade on Monday. On the smaller Cosmos exchange, the Taiwan dollar rose to T$33.060 to the U.S. dollar from the previous close of T$33.650. (Additional reporting by Argin Chang; Editing by Lee Chyen Yee) ((ralph.jennings@thomsonreuters.com; +886 2 2500 4882; Reuters Messaging: ralph.jennings.reuters.com@reuters.net)) ((If you have a query or comment on this story, send an email to newsfeedback.asia@thomsonreuters.com)) Keywords: MARKETS TAIWAN CURRENCY/
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