Taiwan dollar flat, exporters offset fund outflows

* Taiwan dollar retreats after hitting one-year closing high

* U.S. selling from exporters offsets fund outflows

* Investors wary of c.bank, monitor U.S. inflation data (Updates to close)

TAIPEI, Nov 18 - The Taiwan dollar retreated on Wednesday from a one-year closing high hit in the previous session on foreign fund outflows, but exporters' sales of U.S. dollars kept losses in check. The Taiwan dollar ended at T$32.128 to the U.S. dollar, marginally weaker than Tuesday's finish of T$32.120, which is the strongest closing price since Oct. 1, 2008.

Exporters were offering U.S. dollars at around T$32.13, offsetting purchases of the U.S. currency from foreign investors, dealers said.

"Investors went short covering on the U.S. dollar as momentum in local stocks waned following recent gains," said a dealer in Taipei.

The Taiwan dollar usually moves in tandem with the stock market, which rose 0.43 percent on Wednesday.

The local currency could consolidate gains, following regional peers, as investors searched for fresh trading stimulus.

"The market has priced in the signing of a financial MOU with China and come to realise that a sudden appreciation in the Chinese yuan is unlikely," said the dealer.

Some investors covered short positions in the U.S. dollar after euro zone economic policy makers followed U.S. Federal Reserve Chairman Ben Bernanke in commenting on the merits of a strong dollar.

Chinese president Hu Jintao avoided currency issues in his meeting with U.S. President Barack Obama this week.

Dealers said trading was subdued as investors remained cautious ahead of U.S. inflation data and looked out for central bank interventions.

Taiwan's central bank bought U.S. dollars during the session to keep the local currency relatively weak for the benefit of exporters.

0800 GMT PREVIOUS SESSION T$ (Taipei Forex Inc) 32.128 32.120 Volume in $ mln (Taipei Forex Inc) 651 1,309 (Cosmos) 32.115 32.090 Six-month NDFs -0.740/-0.690 -0.760/0.700 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 For more foreign exchange news, please click