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Taiwan dlr at one-mth low on shares, economy woes
Reuters - Tuesday, January 13
TAIPEI, Jan 12 - The Taiwan dollar weakened for a fourth straight session on Monday to a one-month closing low, as a drop in the stock market and a gloomy outlook for the world economy prompted foreign investors to pull out funds.
The Taiwan dollar <TWD=TP> closed at T$33.235 against the U.S. dollar, its lowest finish since Dec. 12, weakening from T$33.16 in the previous session.
Volume on the main Taipei Forex Inc. was light at $733 million, but higher than T$202 million in the previous session when the market opened on Saturday to offset an extra holiday over the New Year weekend.
"A decline in the stock market weighed on the Taiwan dollar. The market also expected the local currency to be on a downward trend as the economy keeps weakening," said a dealer in a local bank.
The dealer expected the Taiwan dollar to trade between T$33.3-T$33.5 this week and test as low as T$34.5 in the first half of this year.
"There were foreign fund outflows, since foreign investors have unloaded local stocks for several days," said another dealer in Taipei.
Taiwan stocks <.TWII> ended 0.31 percent lower on Monday in light trading as investors turned cautious ahead of earnings results by major U.S. firms this week.
Foreign investors sold a hefty T$6 billion worth of local shares, bringing their net selling to nearly T$13 billion so far this month.
The Taiwan dollar was also pressured as its Asian peers such as the South Korean won <KRW=> slid on fears of a prolonged global downturn. [ID:nSP421661]
However, exporters' purchases helped limit the local currency's fall.
Exporters usually prefer a weaker Taiwan dollar so they can convert their U.S. dollar earnings to more of the local currency.
In the non-deliverable forwards market, six-month NDFs were quoted at -0.110/-0.060, narrower than -0.130/-0.100 in the previous session. That means the Taiwan dollar will likely firm by a lesser degree in half a year.
On the smaller Cosmos exchange <COSMOS1>, the Taiwan dollar weakened to T$33.231 from T$33.156 in the previous session. (Reporting by Gina Chang and Yvette Chen, Editing by Jacqueline Wong)
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