Taiwan dollar at 1-1/2-mth low, but exporters support

* Taiwan dollar at intraday low since Sept. 16

* A rebound in the global U.S. dollar pushes down T$

* Exporters curb falls

TAIPEI, Oct 27 - The Taiwan dollar fell to a 1-1/2-month low on Tuesday due to some foreign fund outflows, but exporters took advantage of the weakening local currency to sell off U.S. dollars.

The Taiwan dollar hit as low as T$32.548 to the U.S. dollar, the weakest level since Sept. 16 when the intraday trough was T$32.637.

"Some foreign funds were conducting some outflows this morning, but exporters swiftly took over after they saw the Taiwan dollar weakening so quickly right after the open," said a dealer in Taipei.

The weakening trend in the Taiwan dollar is expected to persist since the U.S. currency rose globally as oil prices fell, prompting investors to unload risky assets, such as emerging Asian currencies.

However, exporters curb the Taiwan dollar's losses.

Exporters typically prefer a weakening Taiwan dollar as they will allow then to convert their U.S. dollar earnings into more of the local currency.

Dealers said the timing was good as it was just days before the end of the month, when the exporters need more of the local currency to settle their cash needs at home.

Offshore investors also covered their short positions in the U.S. dollar, with six-month non-deliverable forwards (NDFs) market narrowing on Tuesday, indicating that the Taiwan dollar will firm by a lesser degree in half a year.

0215 GMT PREVIOUS SESSION T$ (Taipei Forex Inc) 32.490 32.394 (close) Volume in $ mln (Taipei Forex Inc) 224 79 T$ (Cosmos) 32.490 32.390 (close) Six-month NDFs -0.670/-0.620 -0.740/-0.690 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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