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17:03 08Apr09 RTRS-Taiwan dollar logs steepest fall in almost 2 mths * Central bank, some foreign funds buy U.S. dollars * Exporters sell U.S. dollars, help cap losses (Adds details, quotes) TAIPEI, April 8 (Reuters) - The Taiwan dollar logged its biggest fall in nearly two months on Wednesday as investors stayed away from risky assets, while the island's central bank moved to weaken the local currency as exports slumped. The Taiwan dollar fell to as low as T$34.000 to the U.S. dollar, the lowest intraday level hit this month. It erased some losses to end at T$33.900, the weakest close since March 31 and down from the previous close of T$33.569. Volume on the main Taipei Forex Inc exchange was moderate at $1.154 billion, higher than $937 million a day earlier. "The central bank and foreign funds were buying up U.S. dollars. Taiwan stocks, the Korean won and the euro are all down, so that's pressuring the Taiwan dollar," said a dealer in Taipei. "But exporters were also selling U.S. dollars at around T$33.9, so that helped pull the Taiwan dollar back from T$34." Investors sold off Asian stocks and currencies on Wednesday to avoid risky assets due to worries over global corporate earnings and few signs showing a clear recovery in the world economy. Taiwan's central bank also bought U.S. dollars as it has been preferring a relatively weak Taiwan dollar to help exporters hit by the global downturn. Taiwan's central bank frequently buys and sells U.S. dollars to steer the Taiwan dollar in its preferred direction. It has been preferring the Taiwan dollar to trend lower gradually so that the island's exports will be more competitive. On Tuesday, the government said Taiwan's exports in March fell 35.7 percent from a year earlier, logging a seventh straight month of decline as demand for electronics products in key markets shrivelled. [ID:nSP397103] Dealers said they were watching the movement of foreign funds in the stock market later in the day. On Wednesday, foreign institutions sold a net T$10.234 billion ($302 million) in Taiwan stocks <.TWII>, which pressured the Taiwan dollar. Six-month NDFs were quoted on Tuesday at -0.350/-0.310, compared with -0.410/-0.360 in the previous session, indicating that the market expects the Taiwan dollar to strengthen by a lesser degree in half a year. On the smaller Cosmos exchange , the Taiwan dollar softened to T$33.868 to the U.S. dollar from the previous close of T$33.550. (Reporting by Lee Chyen Yee and Rachel Lee; Editing by Jonathan Hopfner) ((chyenyee.lee@thomsonreuters.com; +886 2 2508-0815; Reuters Messaging: chyenyee.lee.reuters.com@reuters.net)) ((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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