Taiwan dollar end at 1-wk low, wary of c.bank

* Taiwan dollar down for second straight day

* Investors cover US$ shorts, caution over c.bank

* NDFs narrow, indicating T$ will firm less (Updates to close)

TAIPEI, Sept 25 - The Taiwan dollar <TWD=TP> fell to a one-week closing low on Friday as investors covered their short positions on the U.S. dollar because of wariness over central bank action, but exporter deals helped limit losses.

"Foreign investors scooped up the battered U.S. dollar in the afternoon, driving the local currency lower," said a dealer in Tapei, who forecast the currency to trade between T$32.35 and T$32.45 next week. "And they were not the only ones interested in the U.S. dollar; the central bank also bought the greenback."

The central bank is inclined to keep the local currency weak as part of its efforts to boost the export sector and ensure the island's trade-reliant economy recovers from its steepest downturn on record.

But exporters converted their U.S. dollar earnings to Taiwan dollars at around T$32.40 prevented the local currency from falling further.

"Exporters bid for the Taiwan dollar below T$32.40 as they anticipated a further rise in the local currency and in need of cash because it's the end of month," another dealer said.

Trade was light as the dealer said some banks still received calls from the central bank.

On Thursday, dealers told Reuters that the central bank had called on them to trim their short positions in the U.S. dollar to keep the Taiwan dollar relatively weak. [ID:nTP41985]

In global markets, the U.S. dollar slipped broadly after G20 leaders pledged in a draft statement to keep stimulus support in place until the global economic recovery firms. [ID:nT140717]

0800 GMT PREVIOUS DAY T$ (Taipei Forex Inc) 32.428 32.395 Volume in $ mln (Taipei Forex Inc) 723 748 T$ (Cosmos) 32.428 32.388 Six-month NDFs <PNDF> -0.600/-0.550 -0.630/-0.580

Note: Taipei Forex Inc is Taiwan's main forex exchange; Cosmos is a smaller exchange. Both exchanges close at 0800 GMT.

Source: NDFs quotations from Prebon Asia

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