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17:37 01Jun09 RTRS-Taiwan dollar at 8-month closing high on funds * Strongest closing price since Oct. 7 * Fund inflows brisk; world recession shows signs of easing * Central bank buys U.S. dollars to keep rate in check (Updates to close) TAIPEI, June 1 (Reuters) - The Taiwan dollar climbed sharply to an 8-month closing high on Monday on foreign fund inflows, exporter purchases and signs that the global recession may be easing after the U.S. economy beat its first quarter forecasts. The Taiwan dollar closed at T$32.375, the highest final price since reaching T$32.350 on Oct. 7 and 0.8 percent stronger than Wednesday's final price of T$32.650. Markets were closed on Thursday and Friday for a public holiday. Monday's percentage gain was the highest since April 30. Volume on the main Taipei Forex Inc exchange was a hefty $2.367 billion, higher than $1.716 billion on Wednesday. Foreign funds, which bought a net T$63.6 billion ($1.96 billion) worth of Taiwan shares in May, drove up the currency, largely on expectations that mainland China investments would soon further boost Taiwan's markets. "The idea that mainland investment will come into Taiwan is taking effect, so foreign funds increasingly want to put money here," a dealer in Taipei said. The Taiwan dollar, which slid earlier in the year due to the global economic downturn, has climbed back in recent weeks on optimism about new trade and investment deals signed in April between the island and economic powerhouse China. Also boosting the Taiwan dollar, the United States reported a better-than-expected first quarter performance. The U.S. dollar held at multi-month lows globally as optimism about the world economy continued to boost currencies perceived to be riskier. [ID:nL1530249] Exporters, which need Taiwan dollars for cash needs at home, bought briskly on Monday, letting the Taiwan dollar firm further. Exporters prefer a weaker rate to buy more Taiwan dollars and stepped up purchases once the rate hit $32.5, dealers said. In the offshore non-deliverable forwards (NDF) market six-month NDFs were quoted at -0.860/-0.810, compared to -0.750/-0.680 on Wednesday, suggesting investors expect the local currency to strengthen by a larger degree in half a year. But Taiwan's central bank bought U.S. dollars on Monday to curb gains, dealers said. The Taiwan dollar had reached an intraday high of T$32.228 minutes before trade ended. The central bank issued a brief statement after the market closed saying that the Taiwan dollar was relatively stable compared with other currencies, such as the Singapore dollar and the South Korean won . On the smaller Cosmos exchange , the Taiwan dollar rose to T$32.230 from Wednesday's close of T$32.550. (Reporting by Ralph Jennings and Lin Miao-jung, 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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