TAIPEI, Aug 10 (Reuters) - The Taiwan dollar declined on Friday as a sharp fall in stocks sparked expectations of foreign fund outflows, though the central bank and exporters were selling U.S. dollars, which curbed the currency's losses.
The Taiwan dollar had weakened to T$32.934 to the U.S. dollar by 0135 GMT from the previous close of T$32.885. The local currency opened stronger at T$32.790.
Volume on the main Taipei Forex Inc. exchange was active at US$114 million after 30 minutes of trade, much higher than US$52 million during the same period a day earlier.
"There might be some foreign fund outflows today, judging how stocks are doing," said a dealer in Taipei.
"The central bank started offering U.S. dollars in early trade because they didn't want the Taiwan dollar to weaken by too much."
Taiwan stocks fell more than 3 percent in early trade after U.S. shares tumbled on fears that the U.S. mortgage market crisis was having a global impact.
Investors in the Taiwan forex market expect a sell-off by foreign investors in the Taiwanese equity market.
On Thursday, foreign institutions bought a net T$10.253 billion (US$312 million) in Taiwan stocks. However, they have been net sellers so far in August.
Dealers said exporters and the central bank's sales of U.S. dollars would likely limit the Taiwan dollar's fall.
"Exporters are quite eager to get rid of U.S. dollars at around T$32.92, but amounts aren't huge," said another dealer in Taipei.
On the smaller Cosmos exchange , the Taiwan dollar stood at T$32.934 to the U.S. dollar from the previous close of T$32.888.
