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Taiwan dlr up on fresh risk appeal, exporter deals

TAIPEI, May 10 (Reuters) - A swift return of appetite for risk-linked currencies following a sweeping move to ease debt fears in Europe pushed the Taiwan dollar up sharply on Monday as exporter deals chased it higher The Taiwan dollar, which jumped more than T$0.3 to the U.S. dollar in midday trade, gained along with other emerging Asian currencies after the European Union and IMF unveiled a $1 trillion package to help stop a debt crisis in the euro zone. Investors took the package as a cue that Greece's debt crisis would not spread elsewhere in Europe, raising hopes for stability in world financial markets and boosting confidence in risky assets such as the Taiwan dollar. "The TWD is following the general trend in the region," said Joanna Tan, an economist with Forecast Ltd in Singapore. "It's the EU package, and risk appetite is improved." Foreign funds have sold T$65.242 billion ($2.1 billion) in Taiwan stocks over the month to date, including T$9.14 billion on Monday, reflecting risk aversion around Asia last week triggered by fears of the debt crisis in Europe. Deals by Taiwan exporters taking advantage of recently weaker rates to meet cash needs at home further supported the local currency on Monday, dealers said. But Taiwan's central bank, mindful of forex speculation and keen to help exporters hit by last year's recession, sold currency on Monday to keep the price in check. The Taiwan dollar is expected to gain longer term, helped by anticipation of a revaluation in the Chinese yuan, for which the local currency is a proxy, and by increases in trade and investment between Taiwan and China. The Taiwan dollar has risen 1.67 percent this year but due mostly to central bank intervention remains one of the worst performers in Asia along with China and Japan. (See for a table of year-to-date Asian currency performance) A measure of non-deliverable forwards indicated that investors still saw the Taiwan unit appreciating. The exchange rate in six months was seen at T$30.970 and two-year NDFs were at T$29.823. 0800 GMT PREVIOUS DAY T$ (Taipei Forex Inc) 31.600 31.850 (close) T$ (Cosmos1) 31.525 31.715 (close) Taipei Forex Inc is Taiwan's main forex exchange; Cosmos is a smaller exchange. ((Reporting by Ralph Jennings; Editing by Jacqueline Wong)) ((ralph.jennings@thomsonreuters.com; +886 2 2500 4882; Reuters Messaging: ralph.jennings.reuters.com@reuters.net)) ($1=31.58 Taiwan Dollar) Keywords: MARKETS TAIWAN CURRENCY/ (If you have a query or comment on this story, send an email to news.feedback.asia@thomsonreuters.com) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved.

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