Taiwan dollar off 11-mth high before c.bank meeting

* C.bank urges dealers to limit U.S. dollar shorts

* C.bank holds interest rate unchanged after market close

* Exporters deals curb losses (Updates to close)

TAIPEI, Sept 24 - The Taiwan dollar weakened on Thursday, retreating from an 11-month closing high, as dealers were asked by the central bank to trim short positions in the U.S. dollar, but exporter deals curbed losses.

The Taiwan dollar ended T$0.026 lower at T$32.395 after closing at T$32.369 in the previous session, its strongest close since Oct 7, 2008.

"Trading was rather quiet throughout the day as we were asked by the central bank to cut short positions in the U.S. dollar," said a dealer at a local bank.

Earlier in the session, seven out of 13 dealers contacted by Reuters said they had received phone calls from Taiwan's central bank enquiring about their U.S. dollar positions.

Shortly after the market close, Taiwan's central bank said it would keep interest rate unchanged at a record low of 1.25 percent and monitor inflation to adjust future monetary policy.

The central bank has been making moves to ensure the island's trade-reliant economy recovers from its steepest downturn on record by controlling the Taiwan dollar's rise to help exports and maintaining a loose monetary policy.

But exporter deals offset losses as they sold dollars at around T$32.400 to meet their cash needs at home and on anticipation the Taiwan dollar would rise more after the central bank said the island's economic contraction has eased.

Dealers said they expect the local currency to trek higher in the near future as they bet that risky assets, such as emerging Asian currencies, would be more appealing to investors on a weakened U.S. dollar.

0800 GMT PREVIOUS DAY T$ (Taipei Forex Inc) 32.395 32.369 Volume in $ mln (Taipei Forex Inc) 748 748 T$ (Cosmos) 32.395 32.360 Six-month NDFs -0.630/-0.580 -0.630/-0.580

Note: Taipei Forex Inc is Taiwan's main forex exchange; Cosmos is a smaller exchange

Source: NDFs quotations from Prebon Asia

For more foreign exchange news, please click