Taiwan dollar rises on foreign funds, exporters

* Exporters keen to sell US$ after T$ hits 3-week low on Wed

* Market watches central bank activity, stocks

TAIPEI, Oct 22 - The Taiwan dollar rose on Thursday after hitting a three-week closing low in the previous session on foreign fund inflows and exporter deals, although the market is eyeing the central bank and the domestic stock market.

"Foreign banks were offering U.S. dollars after trading began, which pushed the Taiwan dollar to the intraday high," said a dealer in Taipei.

"Exporters were also keen to sell U.S. dollars, but overall the mood was a little cautious as investors were watching out for the central bank and data from China."

On Wednesday, the Taiwan dollar <TWD=TP> ended the session at T$32.359, its weakest close since Sept. 29.

Exporters took the advantage of the Taiwan dollar's relative weakness in the previous session to convert their U.S. dollar earnings into more of the local currency.

Dealers said the market was also monitoring Taiwan's main TAIEX stock index <.TWII>, which fell 1.1 percent and damped sentiment.

Some investors who were thinking of selling U.S. dollars stayed on the sidelines as Taiwan's central bank favours a weak Taiwan dollar. They were wary that the central bank might intervene in the market by buying U.S. dollars or call them to enquire about U.S. dollar selling trades.

0230 GMT PREVIOUS SESSION T$ (Taipei Forex Inc) 32.352 32.359 (close) Volume in $ mln (Taipei Forex Inc) 188 310 T$ (Cosmos) 32.350 32.352 (close) Six-month NDFs <PNDF> -0.750/-0.700 -0.730/-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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