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Taiwan dollar at 3-month high on stocks, won
Reuters - Monday, April 6
* Taiwan dollar near 3-month high
* Foreign fund inflows, won help boost Taiwan dollar
* Central bank tests phone lines to dealers
TAIPEI, April 6 - The Taiwan dollar climbed to a three-month high on Monday as the island's stock market rose and some Asian currencies, such as the South Korean won <KRW=>, traded up.
The Taiwan dollar <TWD=TP> rose to an intraday high of T$33.138 against the U.S. dollar shortly after the open, the strongest level since Jan. 10.
By 0208 GMT, it erased some gains to trade at T$33.155, still higher than the previous close of T$33.380.
Dealers said they received calls from the central bank just before the market opened to test the phone lines.
"Many of us received calls from the central bank before markets opened today to say they were testing the phone lines. They didn't say anything else and some of us are wondering whether it's a signal asking us to behave," said a dealer in Taipei.
Taiwan's central bank maintains the Taiwan dollar in a managed float and keeps it under close supervision by buying and selling U.S. dollars, or using verbal intervention, to prevent huge swings in the main currency market.
Volume on the main Taipei Forex Inc exchange was $394 million after an hour, lower than $783 million during the same period a day earlier.
A spate of foreign fund inflows and exporters' deals pushed up the Taiwan dollar strongly in early trade, dealers said.
"The stock market is rising and foreign funds are buying some Taiwan dollars to invest in equities," a second dealer said. "The South Korean won is also strong today, giving the Taiwan dollar more impetus to strengthen."
Taiwan's main TAIEX index <.TWII> rose 0.8 percent, riding on some positive news on the U.S. economy late last week.
The South Korean won <KRW=> rose more than 2 percent against the U.S. dollar as investors brushed aside North Korea's rocket launch over the weekend.
On the smaller Cosmos exchange <COSMOS1>, the Taiwan dollar firmed to T$33.160 from Friday's close of T$33.270. (Reporting by Lee Chyen Yee and Rachel Lee; Editing by Jonathan Hopfner)
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