Most emerging currencies from Asia's export-driven economies firmed on Tuesday after senior Republicans advised US President Donald Trump against imposing tariffs on steel and aluminium, raising hopes that a global trade war could be averted. "The tempering of the trade rhetoric is playing positively...every corner of the world seems to be up in arms with this steel tariff and what it could lead to in terms of a possible escalation of trade wars," said Stephen Innes, head of trading for Asia Pacific at Oanda.
The South Korean won was the region's biggest gainer as it firmed 0.57 percent after weakening about 0.15 percent on Monday. Meanwhile, the Indian rupee was 0.17 percent firmer.
Oanda's Innes said the won and the rupee were benefiting from capital inflows from investors looking to put money in the Indian and South Korean stock markets. "People are expecting good things from undervalued pockets in those economies," he said.
South Korea's KOSPI stock index rose as much as 1.6 percent while India's benchmark equity BSE index was up to 0.9 percent higher. The BSE index had closed the past four sessions lower. The Malaysian ringgit gained 0.08 percent, ahead of Bank Negara Malaysia's (BNM) meeting on Wednesday.
The central bank is not expected to raise the overnight policy rate but traders are likely to closely monitor its forward guidance. Data released on Monday showed Malaysian exports rose 17.9 percent year-on-year in January, beating a Reuters poll median estimate of 11.4 percent.
Singapore's dollar was trading flat while China's yuan showed mild strength. The Chinese central bank set a stronger daily fix. Moving in the other direction, the Indonesian rupiah weakened 0.04 percent.
The Philippine peso firmed 0.08 percent on the day with data released on Tuesday showed stronger inflation, raising the prospect for interest rate hikes, including one later this month. Inflation in February quickened to 3.9 percent, the fastest in more than three years.
The central bank's governor said inflation is expected to settle within its 2-4 percent target in 2019. Bangko Sentral ng Pilipinas, the central bank, is scheduled to hold a monetary policy meeting on March 22.
"In terms monetary policy, we reiterate our forecast of a total 100bp (basis point) in policy rate hikes by BSP this year, starting at its 22 March meeting, in response to rising inflation and inflation expectations," wrote Nomura's Euben Paracuelles, senior economist, and Brian Tan, economist, in a note. The Taiwan dollar was 0.13 percent firmer ahead of inflation and trade data being released on Wednesday.
The currency benefits from easing global trade tensions due to its position as a significant exporter of technology oriented goods. Taiwan's industrial output growth rose to 10.86 percent in January, the Ministry of Economic Affairs' data showed on Monday.
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