The New Taiwan dollar pared gains after the benchmark TAIEX fell, raising concern overseas investors will take funds out of the nation.
The currency earlier rose after opposition parties retained control of the legislative.
The NT dollar was up NT$0.025 to close at NT$32.45 against its US counterpart on the Taipei foreign exchange market,after climbing as much as 0.5 percent in morning session.
The TAIEX fell 0.6 percent after rising 1.1 percent.
"The NT dollar trimmed gains in the afternoon because the stock index suddenly fell" after an earlier advance, said Jerry Ho, a currency trader at International Bank of Taipei (台北商銀).
"That triggered concern funds will flow out of the island, that global investors are still concerned about Taiwan's political outlook," he said.
Money managers abroad yesterday sold a net NT$370 million (US$11 million) of Taiwan's equities, the sixth day of sales, according to stock exchange figures.
``Had we seen Chen [Shui-bian (
``Given the results over the weekend, thank goodness that is now not a factor, so it should be supportive of the NT dollar,'' Rennie said.
The currency may climb to NT$32.24 by the end of June, Rennie said.
Standard & Poor's on Nov. 30 cut Taiwan's debt outlook to negative, partly because of relations between Taiwan and China.
A possible victory for Chen's party at the legislative level and his re-election in March have ratcheted up tensions with China, S&P said.