Most Asian currencies rose on Wednesday as foreign investors flocked into the region's stock markets in anticipation of fresh steps by the Federal Reserve to stimulate the world's largest economy. The South Korean won rose as far as 1,377.9 per dollar, up about 0.9 percent from Friday's domestic close, buoyed by a 5 percent jump in Seoul shares as foreigners snapped up local shares.
The Korean market was closed on Monday and Tuesday for Lunar New Year holiday. The Malaysian ringgit rose as far as 3.6078 per dollar, up about 0.4 percent from Friday, as markets reopened on Wednesday. "The ringgit follows equities, but I reckon it will be confined to tight ranges ahead of the FOMC tonight," said a trader in Kuala Lumpur.
Asian stocks rose almost 2 percent as, buoyed by gains on Wall Street on Tuesday on hopes that government efforts to stabilise the US economy will take hold. The Fed concludes a two-day policy meeting later in the day and could unveil new, unconventional steps to boost lending and spur the ailing economy.
With the benchmark interest rate already near zero, the market will be scouring its statement for any clues on whether it will buy US government bonds, which could help check longer term borrowing rates.
Governments in Britain, Japan and Canada strung together lifelines to rescue their battered economies on Tuesday as the world-wide financial crisis that has cost trillions of dollars and claimed millions of jobs ground on. Trading activity was subdued as currency markets in China and Taiwan remained closed for holidays.
Elsewhere, the Singapore dollar gained about 0.4 percent to 1.4988 per US dollar. "The Singapore dollar is rangy and tracking the euro," said a trader, who predicted the Singapore currency would move between 1.4950 and 1.5050 for the day.
The dollar dipped against the euro on Wednesday as investors awaited the outcome of the Fed meeting. "Perhaps the market is looking for a return to normalcy in the financial conditions both globally and regionally," said Enrico Tanuwidjaja, currency strategist at OCBC Bank.
"But the strength of some regional currencies against the dollar is tentative, as corporate earnings remain critical episodes before the market sees a real turning point," he said. The Indonesian rupiah bucked the general firmness in Asia, falling to 11,350 per dollar as some foreign banks bought the dollar to cover their short positions, traders said.