Taiwan dollar eases on stock losses, importers
Reuters - Wednesday, November 12
TAIPEI, Nov 11 - The Taiwan dollar <TWD=TP> weakened in thin trade on Tuesday, due to domestic stocks losses and importers' purchases of the U.S. dollar but the fall was cushioned as foreign banks sold the U.S. currency.
The Taiwan dollar ended at T$32.874 per U.S. dollar, weakening from Monday's close of T$32.823.
Volume on the main Taipei Forex Inc exchange was thin at $586 million, lower than $608 million a day earlier and well below the $1 billion-plus volumes seen on most average trading days.
"Some oil companies traded in the morning and the fall in local stocks also weighed on the Taiwan dollar," said a dealer at a local bank.
Oil companies usually need U.S. dollars for their imports, such as crude.
Taiwan stocks <.TWII> closed down 2.2 percent on Tuesday as worries about the worsening economic crisis hit financials.
Foreign institutions sold a net T$1.7 billion worth of Taiwan stocks on Tuesday, bringing their total net sales to T$21 billion so far in November.
However, the local currency gained support as foreign banks sold the U.S. dollar.
"The weak export figures and interest rate cut indicate the economy is bad, and the Taiwan dollar will likely fall to support exports. But recent U.S. dollar sales by foreign banks have kept the local dollar from weakening too much," said the dealer.
On Sunday, Taiwan's central bank unexpectedly lowered interest rates by 25 basis points to boost the island's export-driven economy, after Taiwan's October exports dropped from a year earlier, marking their biggest fall in 3-½ years.
Investors also became more cautious on the Taiwan dollar in half a year in the non-deliverable forwards market, with six-month NDFs narrowing to -0.350/-0.300 from -0.370/-0.320 in the previous session.
The Taiwan dollar hit a 10-1/2-year high in late March, when investors anticipated closer cross-Strait relations under China-friendly President Ma Ying-jeou, but the currency has since lost 10 percent, mainly due to fund outflows.
On the smaller Cosmos exchange <COSMOS1>, the Taiwan dollar fell to T$32.863 to the U.S. dollar, from the previous close of T$32.820. (Reporting by Gina Chang and Lin Miao-jung; Editing By Keiron Henderson)
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