Taiwan dollar rises on stocks, wary of c.bank

* Taiwan dollar rises from near 2-week closing low

* Stock gains boost sentiment, exporters eyed

* Investors wary of central bank

TAIPEI, Sept 29 - The Taiwan dollar rose on Tuesday after hitting a near two-week closing low in the previous session as a rise in the stock market boosted sentiment, though investors were wary of central bank intervention.

On Monday, the Taiwan dollar fell for a third straight session to T$32.475, its lowest closing level since Sept. 16.

"The stock market's gains did help push the Taiwan dollar higher, but there isn't too much volume because some investors are quite cautious about the central bank's moves," said a dealer in Taipei.

"Even though the Taiwan dollar is following the general rising trend of Asian currencies, its gains are limited as investors are unwilling to buy too much U.S. dollars given the central bank's stand."

Taiwan stocks rose more than 2 percent on Tuesday, sparking expectations of foreign fund inflows later in the day.

The central bank is adopting a loose monetary policy to help the economy and as there is little inflationary pressure so far, the governor said in a report to be delivered to parliament on Wednesday and seen by Reuters on Monday.

It also said that even though the Taiwan dollar has gained since the beginning of the year, its rise is still smaller compared with regional currencies.

Dealers said that meant the central bank would continue to intervene in the markets by buying and selling U.S. dollars to ensure that the Taiwan dollar only firmed gradually so as to protect the island's export competitiveness.

The central bank is trying to make sure the Taiwan dollar does not firm way beyond T$32.4 by purchasing U.S. dollars during the session.

0215 GMT PREVIOUS SESSION T$ (Taipei Forex Inc) 32.398 32.475 (close) Volume in $ mln (Taipei Forex Inc) 251 257 T$ (Cosmos) 32.400 32.472 (close) Six-month NDFs -0.570/-0.520 -0.570/-0.520

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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