Most Asian currencies rose on Tuesday but gains were limited as investors awaited a speech by Federal Reserve Chair Janet Yellen for hints on the possible timing of a US interest rate hike. Asian currencies regained some footing as the dollar retreated broadly, with the South Korean won rising 1.0 percent and pulling away from a 3-1/2 week low set on Monday.
Firmness in South Korean equities helped lend support to the won, said Wu Mingze, FX trader of global payments for financial services provider INTL FCStone in Singapore. South Korean shares rose 0.4 percent and foreign investors turned buyers before the closing bell.
Investors are now waiting for fresh hints on the outlook for US interest rates from Fed Chair Janet Yellen, who is due to deliver a speech on Friday at the Fed's annual conference in Jackson Hole, Wyoming. Yellen will be speaking in the wake of a series of upbeat comments by Fed policymakers including New York Fed President William Dudley, who said last Tuesday that a rate hike was "possible" as soon as September.
Such comments are probably laying the groundwork for Yellen's speech at Jackson Hole, said Philip Wee, senior currency economist at DBS Bank. "This year, markets have gotten used to the Fed pause leading to risk rallies and a lower US dollar. The Fed probably thinks this has gone on too long and too far," Wee said. Against a basket of six major currencies, the dollar slipped 0.3 percent to 94.281, down from Monday's intraday high of 94.958.
The Thai baht edged higher, with traders citing inflows into local bonds and dollar-selling by local exporters. The baht held firm even after comments from Thailand's central bank governor, who said a rapid rise in the baht was not good for the country's economic recovery although it was not causing exports to decline. He added that the baht was not stronger than regional currencies. The baht has risen about 4 percent against the dollar this year.