Most emerging Asian currencies slid on Monday amid expectations that the US Federal Reserve will start raising interest rates later this year, even though its chief reiterated that it may not rush to tighten monetary policy. The Malaysian ringgit hit a one-week low as sliding oil prices renewed concerns that lower crude may hurt the country's current and fiscal accounts. The Singapore dollar also touched a one-week low as hedge funds unloaded it.
The US dollar gained against a basket of six major currencies, while 10-year US Treasury yield rose.
On Friday, Fed Chair Janet Yellen outlined the case for a 'gradualist approach' to rate hikes, in comments mirroring those at the post-policy meeting on March 18. Yellen said policy tightening could "speed up, slow down, pause, or even reverse course" depending on actual and expected developments in the world's top economy.
The result of the latest US central bank's meeting caused investors to move expectations of the first rate hike timing to September from June. That helped most emerging Asian currencies post weekly gains again last week.
Investors are now focused more on higher US borrowing costs rather than timing of rate hikes, especially ahead of US jobs data later this week.
Economists polled by Reuters are forecasting a 244,000 rise in non-farm payrolls in March. If confirmed, it would be the 13th straight month of job gains of over 200,000, matching a run in 1994-95.
"Anyway, the Fed will raise interest rates this year, while other countries, including Asia, have to maintain easing bias," said Jeong My-young, Samsung Futures' research head in Seoul.
"So, a strong dollar trend stays intact despite some signs that it is still excessively bought," Jeong added.
The ringgit fell 0.8 percent to 3.7130 per dollar, its weakest since March 23.
Oil prices extended losses as Iran and six world powers tried to reach a deal that could add oil to the market if sanctions against Tehran are lifted.
The Malaysian currency came under further pressure from daily fixing-linked dollar demand. The government's bond prices eased with the five- and ten-year yields up.
The Singapore dollar lost 0.4 percent to 1.3750 per the US dollar, its weakest since March 23, on selling from macro funds and interbank speculators.
"NEER-implied USD-SGD thresholds are also slightly higher on the day with the pair likely to base around 1.3675 towards 1.3775 if regional sentiment remains shaky," said Emmanuel Ng, a foreign exchange strategist with OCBC Bank, wrote in a client note, referring to the Singapore dollar nominal effective exchange rate.
The won eased as offshore funds sold the South Korean currency.
Local exporters bought the won for month-end settlements on dips, limiting its losses.
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