By Rachel Lee and Kelvin Soh

TAIPEI, Nov 10 (Reuters) - Taiwan imposed capital controls on Tuesday, banning foreign funds from investing in time deposits in a move that appeared to be aimed at deterring bets on currency appreciation.
The central bank, which announced in October that foreigners had parked about T$500 billion ($15.5 billion) in Taiwan dollar accounts, said it wanted investors betting on Taiwan's economy to put their money in stocks.

The ban, announced by the financial regulator, reflects concern among policymakers in some emerging markets that the inflow of money could create asset price bubbles and boost their currencies to levels that would undermine exports.
Last month, Brazil announced a 2 percent tax on foreign investment in stocks and fixed-income securities to contain the rapid strengthening of the real.
Over T$4.63 trillion of foreign funds flowed into Taiwan up to September this year, the Financial Supervisory Commission said, with about 0.21 percent of that being placed in time deposits.
"If they're putting money in Taiwan they should put it in stocks," Lin Sun-yuan, the director-general of the foreign exchange department at Taiwan's central bank told Reuters. "Why would you want to put it in a time deposit?"
The ban would take effect immediately, Lu Ting-chieh, chief secretary of the Financial Supervisory Commission, said at a news conference.
Taiwan's economy relies on exports, with technology companies such as TSMC and Acer depending on overseas markets for much of their revenue. Any currency appreciation threatens their bottom line.
"This is very clearly a move to stop speculation in the Taiwan dollar," said Ma Tieying, an economist at DBS in Singapore.
"There's a lot of foreign funds that are betting on emerging markets such as Taiwan, and with the central bank trying to keep the currency weak, this seems like a first step it's taking."
The Taiwan dollar has appreciated 1.7 percent against the U.S. dollar this year and, along with the Chinese yuan, has lagged the broader gains in other Asian currencies.
"We expect the Taiwan dollar to weaken tomorrow with the short-end NDF points likely to move back into premium in the coming weeks," analysts at HSBC said in a note.
"In Asia, Thailand is the only other country that has openly discussed discomfort with inflows and appreciation, in part because of the importance of exports."

"Conversely, Indonesian, Malaysian, and Filipino authorities have indicated relatively more comfort with current conditions."
Investors would likely trim exposure to the Taiwan dollar and the Thai baht in favour of currencies in Indonesia, Malaysia and the Philippines, the note said.
Analysts estimate the Taiwan dollar and the South Korean won are undervalued in real, trade-weighted terms.
The authorities have been trying to curb speculation in Taiwan assets. Last month the central bank urged lenders not to push down mortgage rates, indicating it was concerned about rising house prices.

(Additional reporting by Roger Tung and Saeed Azhar in SINGAPORE)

((Editing by Dayan Candappa, kelvin.soh@thomsonreuters.com; +886 2 2508 0815; Reuters Messaging: kelvin.soh.reuters.com@reuters.net)) Keywords: TAIWAN ECONOMY/FUNDS (If you have a query or comment on this story, send an email to news.feedback.asia@thomsonreuters.com)

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