Taiwan dollar falls on foreign fund outflows

* Foreign funds exit, stock market falls

* C.bank prefers weak currency as exports remain sluggish

* Investors await more U.S. data

TAIPEI, June 9 - The Taiwan dollar fell for a fifth straight session on Tuesday due to foreign fund outflows in the equity market, with weak export data reinforcing expectations the central bank will keep the currency relatively weak.

The Taiwan dollar <TWD=TP> had weakened to T$32.915 to the U.S. dollar by 0225 GMT from the previous close of T$32.875, its weakest final price since T$32.882 on May 19.

Volume on the main Taipei Forex Inc exchange was thin at $207 million after 75 minutes of trade, lower than $256 million during the same period a day earlier.

"We saw some foreign funds leaving the market today, but the amounts weren't huge. Basically, market sentiment is quite weak so far because the stock market is falling," said a dealer in Taipei. Taiwan stocks <.TWII> were down by more than 2 percent on Tuesday, an indication that there could be more foreign fund outflows later in the day. [ID:nTPU001437]

Foreign institutions, which have been net sellers in Taiwan stocks for four straight sessions, unloaded another T$6.912 billion ($210 million) on Monday, pressuring the Taiwan dollar.

"Exports are getting better but in general, they are still weak. I think the central bank would still prefer the Taiwan dollar to be weak," said the dealer.

On Monday, the finance ministry said Taiwan's exports in May fell by almost a third from a year earlier, although the fall was slightly less than expected as a slump in demand from the island's major trading partners showed tentative signs of easing. [ID:nSP402268]

A weaker local currency helps make Taiwan's exports, the mainstay of the economy, more competitive compared with regional peers, such as South Korea.

On the smaller Cosmos <COSMOS1> exchange, the Taiwan dollar softened to T$32.908 from the previous close of T$32.871.