+7.0 /32.855/ 843

16:44 20May09 RTRS-Taiwan dollar at 5-month high on stocks, inflows * Local stocks up, foreign funds active * Highest final price since Dec. 19 * Taiwan central bank seen pushing currency weaker (Updates to close) TAIPEI, May 20 (Reuters) - The Taiwan dollar firmed on Wednesday underpinned by stock market gains and foreign fund inflows, but the central bank was seen selling the local currency while the island's first H1N1 flu case daunted some investors. The Taiwan dollar rose to a high of T$32.815 in intraday trade, up from Tuesday's close of T$32.882, but pared some of those gains to close at T$32.855, its highest final price since Dec. 19. Volume on the main Taipei Forex Inc exchange was thin at $843 million, lower than $1.1 billion a day ago. "Stocks did well and today foreign funds were buying, while the U.S. dollar has been static," a dealer in Taipei said. Taiwan stocks <.TWII> rose 0.72 percent on Wednesday. Foreign funds bought a net T$7.029 billion ($214 million) in local shares for a second straight day of net purchases. Exporters, who prefer a weaker local currency to exchange more of their foreign exchange holdings, also began to buy Taiwan dollars, the dealer said. Exporters are usually active towards the end of the month as they sell U.S. dollar holdings to meet cash needs at home. But the central bank, which keeps the currency in a managed float and has pushed it weaker in recent months to help recession-hit export firms, bought U.S. dollars during the session, curbing the rate rise, another dealer said. Some investors also sold Taiwan dollars after the government announced the island's first H1N1 flu case, a 52-year-old Australian doctor who flew in on Tuesday, a third dealer said. "Many investors who were short on the U.S. dollar tried to cover their positions after Taiwan confirmed its first H1N1 case," the dealer said. "It's still a safe asset after all." The Taiwan dollar slid fast earlier in the year due to the global economic downturn but has climbed back in recent weeks on optimism about new trade and investment deals signed in April between the island and economic powerhouse China. On the smaller Cosmos exchange , the Taiwan dollar firmed to T$32.815 from Tuesday's close of T$32.866. (Reporting by Ralph Jennings, Editing by Jacqueline Wong) ((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 news.feedback.asia@thomsonreuters.com)) Keywords: MARKETS TAIWAN CURRENCY/
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