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16:46 25Aug09 RTRS-Taiwan dollar down on stock losses * Investors short-cover U.S. dollar as stocks fall * Dealers wary of central bank intervention * Central bank prefers weak T$ after export orders decline (Adds details, quotes) TAIPEI, Aug 25 (Reuters) - The Taiwan dollar fell on Tuesday from a two-week closing high in the previous session with investors covering their short positions on the U.S. dollar as the stock market fell. "Investors were covering their short positions in the U.S. dollar. Nobody was in an upbeat mood because the stock market is falling," said a dealer in Taipei. Taiwan's stocks <.TWII> fell 0.42 percent, with foreign institutions selling a net T$676 million ($20 million) during Tuesday's session. Earlier in the day, importers were in the market buying U.S. dollars, taking advantage of three straight sessions of rises in the local currency through Monday. A firming Taiwan dollar allows importers to use less of the local currency to convert into U.S. dollars needed for their overseas purchases. On Monday, the Taiwan dollar had closed at its strongest since Aug. 11, after rising for three straight sessions. Some dealers were also cautious about central bank intervention, especially as Taiwan's exports and orders were still falling. The central bank has been steering the Taiwan dollar towards a weakening stance for most of this year to help boost the island's export competitiveness. Exports are the mainstay of the technology-reliant economy. Taiwan's export orders in July fell 8.77 percent from a year earlier, the smallest decline since October 2008, although the jobless rate hit a record high of 6.01 percent in the same month, suggesting the economy was still not fully recovered. [ID:TP368545] Some political uncertainty due to an imminent cabinet reshuffle, and the spread of the H1N1 virus globally also weighed on sentiment. Dealers said there would be little impact after the United States reappointed Ben Bernanke as Federal Reserve chairman for a second term, as the move was in line with market expectations. 0800 GMT FRIDAY'S SESSION T$ (Taipei Forex Inc) 32.920 32.863 (close) Volume in $ mln (Taipei Forex Inc) 515 494 T$ (Cosmos) 32.918 32.860 (close) Six-month NDFs -0.460/-0.410 -0.450/-0.400 Note: Taipei Forex Inc is Taiwan's main forex exchange; Cosmos is a smaller exchange. Daily trading ends at 0800 GMT. Source: NDFs quotations from Prebon Asia For more foreign exchange news, please click [nTOPFRX] (Reporting by Lee Chyen Yee and Alice Chen; Editing by Chris Lewis) ((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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