BENGALURU: South Korea and Taiwan stocks fell more than 1% each on Tuesday, leading declines across Asia’s emerging markets, while the focus remained squarely on key central bank policy decisions that left already unnerved investors unsure about taking on riskier bets.

Currencies in the region were largely range-bound as uncertainty around midweek monetary policy meetings from the Bank of Japan (BOJ) and the US Federal Reserve sent investors scurrying for the safety of the dollar.

The dollar index - which measures the currency against a basket of peers - inched up 0.2% to 104.6, while the Indonesian rupiah and Thailand’s baht fell more than 0.2% each.

Shares in Asia slipped, with those in the Philippines and Indonesia dipping more than 0.7% each, while stocks in Taiwan touched their lowest since June 12. Shares in South Korea fell 1.1%.

Traders eased long-held bets against the Japanese yen, helping the frail currency, on mounting expectations the Fed would cut interest rates in the world’s largest economy as early as September.

The yen, which is among the best-performing currencies this month, is set to add over 4% in value so far in July.

It however eased marginally by 0.1% as the BOJ began its two-day meeting on Tuesday.

A diverse set of factors has sparked market anxiety over how stretched valuations in Big Tech might be, against a backdrop of rising US-China trade tensions and tepid earnings.

“This underscores the benefit of diversification into Asian credit assets, which are less exposed to global equity volatility, and are also not the target of flighty carry trades,” Eugene Leow Senior Rates Strategist at DBS wrote.

Asian credit’s lack of correlation with the yen and tech stocks also suggests that the market is not seeing concentrated positions by hedge funds, Leow added.