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16:29 03Jun09 RTRS-Taiwan dollar firms on flows, U.S. data; c.bank curbs * Foreign funds buy Taiwan shares for fifth straight session * Upbeat U.S. housing data increases risk appetite * Investors wait after central bank intervention on Tuesday (Updates to close) TAIPEI, June 3 (Reuters) - The Taiwan dollar firmed on Wednesday on foreign fund inflows and increased risk appetite, but the central bank bought U.S. dollars to limit gains, prompting some investors to stay on the sidelines. The Taiwan dollar closed at T$32.505 to the U.S. dollar, up from the previous close of T$32.534. Volume on the main Taipei Forex Inc exchange was $1.033 billion, lower than $2.134 billion on Tuesday. "There was a bit of an inflow today, but yesterday's central bank movements scared people, so today you see a state of waiting and watching," said a dealer in Taipei. Boosting the currency on Wednesday, foreign funds bought a net T$8.11 billion ($250 million) in Taiwan stocks <.TWII>. Those funds, net buyers for five straight sessions, are optimistic about investment in Taiwan from economic powerhouse China, which signed historic deals with the island government in April. Also supporting the local currency, the U.S. dollar hit new lows on Wednesday after upbeat U.S. housing data the previous day buoyed risk appetite, reducing the greenback's safe-haven demand. U.S. pending home sales posted their third straight monthly rise, fuelling optimism that the worst is over for the U.S. economy, which is Taiwan's second-biggest export destination by country, data showed on Tuesday. But many investors waited on Wednesday after the central bank bought huge amounts of U.S. dollars a day earlier, pushing the Taiwan dollar down sharply to an intraday low of T$32.750. The authority also bought U.S. currency on Wednesday, curbing gains, dealers said. The central bank has been moving to ensure the Taiwan dollar trends higher only very gradually, amid growing risk appetite among investors, because it wants to help beleaguered exporters stay competitive. Further curbing currency gains on Wednesday, Taiwan importers took advantage of the price to buy foreign currency for cash needs overseas, a dealer said. On the smaller Cosmos exchange , the Taiwan dollar firmed to T$32.482 to the U.S. dollar from the previous close of T$32.525. (Reporting by Ralph Jennings and Lin Miao-jung; Editing by Ken Wills) ((ralph.jennings@thomsonreuters.com; +886 2 2500 4882; Reuters Messaging: ralph.jennings.reuters.com@reuters.net)) ((If you have a query or comment on this story, send an email to newsfeedback.asia@thomsonreuters.com)) Keywords: MARKETS TAIWAN CURRENCY/
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