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Taiwan dlr at over one-wk high on funds, exporters
Reuters - Wednesday, December 31
TAIPEI, Dec 30 - The Taiwan dollar firmed to an 11-day closing high on Tuesday, lifted by a jump in local stocks fuelled by foreign funds, aggressive exporter purchases and the central bank's comments on interest rates.
The central bank bought U.S. dollars shortly before the market closed to keep local currency gains in check to help maintain export competitiveness, dealers in Taipei said.
The Taiwan dollar <TWD=TP>, rose for a fifth straight session and closed at T$32.865 to the U.S. dollar, the highest since Dec. 19 and up from Monday's close of T$33.000.
Volume on the main Taipei Forex Inc exchange was moderate at $900 million, up from $474 million on Monday.
"Exporters are buying , as it's close to the end of the year," said a dealer in Taipei. "There are also some U.S. dollar sales by foreign funds investing in the stock market."
Taiwan stocks <.TWII> rose 3.9 percent in their biggest gain in three weeks on Tuesday, with financial shares leading the rally after a report saying that up to a dozen local banks could set up branches in China by the end of 2009.
Foreign funds became net buyers in the stock market for the first time since Dec. 18 by purchasing a net T$5.321 billion in Taiwan stocks on Tuesday, bringing the total buying to T$17.214 billion so far this month.
Exporters also aggressively bought the local currency, taking advantage of the favourable rates to meet cash needs at home before the end of the month and year.
In early trade, the currency also found support in central bank Governor Perng Fai-nan's comments a day earlier that the bank would not cut interest rates to zero to boost the island's moribund economy.
Taiwan's central bank, which keeps the Taiwan dollar in a managed float and seeks to prevent any massive fluctuations in the local currency, intervened just before the closing bell, dealers said.
A weaker Taiwan dollar makes Taiwan's exports cheaper for foreign buyers, helping the island's many export-oriented tech companies compete with their foreign rivals.
On the smaller Cosmos <COSMOS1> exchange, the Taiwan dollar firmed to T$32.770 compared with Monday's close of T$32.990. (Reporting by Ralph Jennings and Yvette Chen; Editing by Tomasz Janowski)
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