Taiwan dollar at 3-week low on fund outflows

* Taiwan dollar tracks losses in local stocks

* Exporter deals seen supporting Taiwan dollar

* U.S. dollar bounces back from 14-month low (Updates to close)

TAIPEI, Oct 21 - The Taiwan dollar fell to its lowest close in three weeks on Wednesday on foreign fund outflows as the stock market fell, but exporter deals supported the Taiwan dollar.

The Taiwan dollar <TWD=TP> ended the session at T$32.359, its weakest closing since Sept. 29. The local currency was further pressured by a rebound in the U.S. dollar during the session.

"Investors from the spot market and offshore market picked up U.S. dollars, and the central bank followed suit," said a dealer in Taipei.

The Taiwan central bank has been buying U.S. dollar to keep the Taiwan dollar relatively weak to help the island's exporters.

According to a recent poll by Reuters, Taiwan's export orders likely fell 8.5 percent in September from a year earlier, logging the smallest decline since last October as a result of strong Chinese demand. [ID:nTP202078]

Orders have been logging annual falls for the past year because of the global downturn, hampering actual exports, which are the mainstay of the economy.

On Wednesday, foreign institutions sold a net T$3.3 billion ($102 million) worth of Taiwan stocks <.TWII>, which ended down 0.67 percent.

However, deals by exporters helped limit the local currency's fall. Exporters offered U.S. dollars at between T$32.350 and T$32.370 to meet cash needs at home at the end of month.

0800 GMT TUESDAY SESSION T$ (Taipei Forex Inc) 32.359 32.275 Volume in $ mln (Taipei Forex Inc) 1,144 532 T$ (Cosmos) 32.352 32.270 Six-month NDFs <PNDF> -0.730/-0.700 -0.750/-0.700 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

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