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17:11 25Mar09 RTRS-Taiwan dollar closes at week low, more weakness seen * Taiwan dollar at 1-week low on U.S. dollar short-covering * Some investors stay away before c.bank meeting on Thursday * Further weakness seen ahead of earnings season in Taiwan (Adds details, quotes) TAIPEI, March 25 (Reuters) - The Taiwan dollar fell for a second straight session to a one-week closing low on Wednesday as investors covered their short positions on the U.S. dollar, but exporter deals and central bank intervention curbed losses. The Taiwan dollar weakened to an intraday low of T$33.947, but pared some of those losses to close at T$33.888, its weakest close since March 19. The local currency closed the previous session at T$33.788. Volume on the main Taipei Forex Inc exchange was moderate at $918 million, higher than Tuesday's $865 million. "Investors who were short on the U.S. dollar were trying to hedge their risks today," said a dealer in Taipei. "The Taiwan dollar has been rising for a while now, and they're trying to adjust their positions by short-covering the U.S. dollar." Dealers said the spot market took cues from the non-deliverable forwards market, where dealers have been covering their short positions in the U.S. dollar. Six-month NDFs were quoted at -0.220/-0.170, compared to the previous day's -0.230/-0.200, indicating that the market was expecting the Taiwan dollar to firm less than had earlier been expected. Dealers said some investors were staying on the sidelines ahead of a central bank meeting on Thursday, where a majority of economists are expecting a 25 basis point cut in the island's benchmark discount rate. [ID:nTP174054] "The direction of the Taiwan dollar could become clearer after the central bank meeting," said the dealer. "We've got some investors who're sitting by the sidelines and waiting for a clearer direction." Dealers also said the Taiwan dollar is likely to continue to depreciate in coming days as the central bank may continue to intervene to keep the local currency down to help exporters suffering from a demand slump. Many of Taiwan's export-reliant firms generally prefer a weaker local currency as it allows them to get more of the local currency for every U.S. dollar, thus boosting their earnings, which is reported in Taiwan dollars. On the smaller Cosmos exchange , the Taiwan dollar was trading at T$33.870, compared to Tuesday's close of T$33.772. (Reporting by Kelvin Soh and Lin Miao-jung; Editing by Nick Macfie) ((kelvin.soh@thomsonreuters.com; +886 2 2508 0815; Reuters Messaging: kelvin.soh.reuters.com@reuters.com)) ((If you have a query or comment on this story, send an email to news.feedback.asia@thomsonreuters.com)) Keywords: MARKETS TAIWAN CURRENCY/
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