Asian currencies mostly steady

The Philippine peso rebounded on Tuesday after high January inflation dampened interest rate cut expectations, while other Asian currencies traded in tight ranges ahead of the Lunar New Year holidays.
With central banks in Australia, Britain and the euro zone reviewing rates this week, investors remained on the sidelines, waiting to see how policy makers respond to the US economic slump.
The dollar held steady against the euro but dipped against the Australian dollar after the Australian central bank raised its benchmark rate by a quarter of a point to 7 percent on Tuesday, as expected. "Majors are range trading, while the focus in dollar-AXJ (Asia excluding Japan) is still more skewed towards inflation fears than growth fears. That is supportive for the currencies," said Thomas Harr, currency strategist at Standard Chartered Bank.
Inflation concerns supported the Philippine peso, which briefly dipped to 40.845 but rebounded to 41.51 in late trade, up 0.3 percent from Monday's close. The government said on Tuesday that inflation spiked to 4.9 percent in January - its highest in more than a year, sparking speculation that the central bank may end its easing campaign after it trimmed its benchmark by 25 basis points last week.
However analysts said the currency was unlikely to see further upwaard movement in the near term. "I believe that the dollar/peso is stuck in the ranges for now, and that the risk is more to the downside than the upside," Harr said. His forecast for the peso was 40/dollar at the end of the first quarter.
The peso is sensitive to political unrest in the Philippines and traders said its initial fall came partly in response to the ousting of a former ally of President Gloria Macapagal Arroyo as speaker of the Lower House on Tuesday. Jose de Venecia's removal was perceived as punishment for corruption charges that his son levelled against the Arroyo administration.
It was seen, as strengthening Arroyo's control over the government but some traders seemed to be using the development to unload peso holdings. The Taiwan dollar and South Korean won managed to squeeze modest gains ahead of a long holiday break.
The Taiwan dollar rose to a 20-month high of 31.994 per US dollar as market players adjusted positions on the last trading day before the week-long Lunar New Year break. Traders say investors went short on US dollars and there was also a jump in the conversion of export earnings ahead of the holiday.
The Korean won rose marginally by about 0.1 percent to 941.5 per dollar as local shares edged up by 0.4 percent. Across Asia, stock markets were under pressure from a drop in US stocks overnight, with MSCI's measure of Asia Pacific stocks excluding Japan dropping 0.4 percent. Many countries in the region start holidays this week, including South Korea, Taiwan and China.