The Singapore dollar and the Taiwan dollar fell to one-month lows on Tuesday on concern the US Federal Reserve may signal a faster pace of interest rate increases, making Asian assets less attractive to investors. The Singapore dollar fell as much as two-thirds of a percent to 1.6387 per dollar, its lowest since February 21. The Taiwan dollar fell for the eighth straight day, losing as much as 0.4 percent to 31.42 per dollar, before closing local trading at 31.39.
The Philippine peso bucked the trend among Asian currencies for the second day, gaining 0.10 percent to 54.13 per dollar after the country posted a trade surplus in January, extending a recent good run on the trade series.
Dealers bid other Asian currencies lower against the dollar on expectations the Federal Reserve may indicate a tougher stance against inflation at a meeting on Tuesday when it is expected to raise its key interest rate by 25 basis points to 2.75 percent.
"The gradualist Fed has been based on the notion that core inflation remains well contained, but this premise is now being challenged by economic events," said Claudio Piron, a currency strategist at J.P. Morgan Chase Bank in Singapore, in a report.
US rate expectations and high oil prices have triggered a sell-off in regional stocks by foreign investors.
On Tuesday foreigners were net sellers of South Korean stocks for the 14th straight session and net sellers of Taiwan stocks for the seventh session.
On Tuesday the won recovered to 1,009.4 per dollar in late Asian trading after falling as much as 0.6 percent to a one-month low of 1,015. High oil prices remained a concern for regional investors because most Asian economies are dependent on imported oil. US crude oil futures traded at $57.26 per barrel on Tuesday, near last week's record high of $57.60.
The Indonesian rupiah recovered from a nine-month low in early trading to end the Asian day a tenth of a percent stronger at 9,375 per dollar after the central bank sold dollars to prop up the currency. Most Asian central banks have been buying dollars this year to keep their currencies from gaining.
The rupiah has lost 1 percent this year, making it Asia's worst performing currency after the yen. Although an Opec member, Indonesia has become a net importer of oil.
The Thai baht fell a quarter of a percent on Tuesday to 38.65 per dollar, its weakest since February 10.
Prime Minister Thaksin Shinawatra said a decision on Tuesday to raise the country's diesel prices by 20 percent may cut economic growth this year to between 5.25 to 6.25 percent, compared with a previous forecast of 5.50 to 6.50 percent.