Most emerging Asian currencies rose on Tuesday after disappointing US economic data, while caution increased ahead of the Federal Reserve's monetary policy meeting starting later in the day. The Taiwan dollar advanced on exporters' demand. Other regional units such as the Malaysian ringgit and the Thai baht gained as the US dollar's overnight weakness caused investors to cut bearish bets.
The greenback on Monday slid against a basket of six major currencies on data showing that US industrial production unexpectedly fell in May as manufacturing and mining activity remained weak. Still, traders and investors were reluctant to add bullish positions on emerging Asian currencies, bracing for the result of the Fed's two-day policy meeting and hints on when US
interest rates will start rising from Fed Chair Janet Yellen. "Asian currencies are unlikely to extend gains ahead of the FOMC," said Yuna Park, a currency and bond analyst at Dongbu Securities in Seoul, referring to the Federal Open Market Committee. The Taiwan dollar rose as local exporters bought it for settlements when it was weaker than 30.950 per US dollar.
The island's currency pared some gains as foreign investors continued to sell local stocks. Foreigners on Monday reported an unbroken net selling streak since the start of June, unloading a combined net T$70.9 billion ($2.3 billion) worth of shares. The Taiwan dollar's upside was also limited as the yen slid after Bank of Japan Governor Haruhiko Kuroda said he was not making any assessment on nominal yen levels or predicting its future moves in his comments to parliament last week. The ringgit gained as traders covered short positions on the dollar's overnight weakness. The Malaysian currency also found support from demand against the neighbouring Singapore dollar. Still, traders stayed wary ahead of the Fed's policy meeting.