The Taiwan dollar firmed to a 3-1/2 month high on Monday as exporters' deals more than offset the impact of comments by Taiwan's President that signalled a tougher stand towards China, dealers said.
The Taiwan dollar ended stronger at T$32.818 to the US dollar from Friday's close of T$32.850. It had firmed to as high as T$32.780 during the session - its strongest level since September 15, when it hit an intra-day high of T$32.761.
Trading volumes on the Taipei Forex Inc exchange fell to a moderate US $517 million from a hefty US $1.219 billion in the previous session. President Chen Shui-bian said in his New Year speech on Sunday that Taiwan should adopt "proactive management and effective liberalisation" towards investing in China.
His comments, which also pushed domestic stocks lower, caused the Taiwan dollar to weaken in early trade, though the local currency backtracked losses after exporters entered the market.
"We received some exporters' deals today, which pushed up the Taiwan dollar. But Chen's comments might weigh on sentiment in coming sessions," said a dealer in Taipei.
Dealers said the central bank was seen curbing the Taiwan dollar's rise during the last minutes of trade, though the amount wasn't huge.
"Foreign funds weren't very active today. It's hard to see whether there were net inflows or outflows.
Amounts roughly cancelled off each other," another dealer said.
Net purchases into Taiwan's stocks by foreign investors were relatively small.
On Monday, they bought another net T$881 million (US $26.9 million), which is much lower than daily net purchases of billions of Taiwan dollars for almost all of December.
Japan and US markets are closed on Monday for New Year's Day. The South Korean won posted its strongest close in more than six months on Monday at 1,008.0 to the US dollar due to a stock market rally and data showing solid exports.
On the smaller Cosmos exchange the Taiwan dollar ended at T$32.805 to the US dollar, rising from Friday's close of T$32.843.
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