Taiwan dlr falls on funds, c.bank; exporters support

* C.bank buys U.S. dollars minutes before market close

* Exporter deals limit unit's losses

* Trade cautious next week on wariness over c.bank (Updates to close)

TAIPEI, Oct 16 - The Taiwan dollar <TWD=TP> fell as foreign investors and the central bank bought U.S. dollars, but exporter deals limited losses.

"The central bank bought quite a lot of U.S. dollars minutes before market closed," said a dealer in Taipei.

The central bank's move caused the Taiwan dollar to extend its decline just before the market close, ending at its intraday low of T$32.300.

The Taiwan dollar has been hovering in a tight range between T$32.20 and T$32.40 over the past week or so, partly because of wariness over the central bank's U.S. dollar buying intervention.

The local currency has more room to gain, in line with the Asia trend, but the central bank normally aims to curb its strength to maintain the island's export competitiveness.

"The Taiwan dollar will trade in a narrow range at around T$32.40 next week before fresh incentives boost more inflows," said a another dealer in Taipei.

The central bank's recent warning on hot money caused fund outflows over the past two days, said a dealer in Taipei, pushing the local currency lower.

On Wednesday, Central Bank Governor Perng Fai-nan said foreign investors had parked about T$500 billion ($15.5 billion) in their Taiwan dollar accounts, out of which T$400 billion was not accounted for. [ID:nTP12781]

However, exporter deals cushioned some of the Taiwan dollar's losses. Exporters were selling U.S. earnings at around T$32.26 and T$32.27 in the afternoon, dealers said.

In the offshore non-deliverable forwards (NDFs) market, six-month NDFs narrowed on U.S. dollar short-covering, meaning that the market expected the Taiwan dollar to rise less than earlier estimates.

0800 GMT PREVIOUS SESSION T$ (Taipei Forex Inc) 32.300 32.218 Volume in $ mln (Taipei Forex Inc) 1,177 872 T$ (Cosmos) 32.265 32.215 Six-month NDFs <PNDF> -0.780/-0.730 -0.840/-0.790

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

Source: NDFs quotations from Prebon Asia

For more foreign exchange news, please click [nTOPFRX]