Most Asian currencies edged higher on Tuesday, but gains were limited as traders awaited US economic data for further clues on whether the Federal Reserve may raise interest rates soon. The South Korean won rose 0.6 percent against the dollar to lead gains among Asian currencies. The Taiwan dollar, Thai baht, Indian rupee and Chinese yuan also eked out gains.
Their advance was limited, however, after hawkish comments from top Fed officials last week rekindled bets that the US central bank could raise interest rates as early as next month. "There is general US dollar buying since Jackson Hole," said a trader for a Malaysian bank, adding that hopes for a US rate hike were supporting the greenback.
Fed Chair Janet Yellen said on Friday at the Fed's annual conference in Jackson Hole, Wyoming, that the case for a rate increase had grown stronger in recent months. Fed Vice Chair Stanley Fischer said Yellen's speech was consistent with expectations for possible interest rate hikes this year.
The focus now is whether US economic indicators coming up this week, such as nonfarm payrolls data on Friday, will add to expectations for the Fed to raise interest rates soon, or cause such bets to recede. The baht edged up 0.1 percent to 34.58 and remained within sight of a 13-month high of 34.52 against the dollar set on Friday. Although there has been some month-end demand for dollars among local importers, inflows into Thai equities were helping to support the baht, traders said. The baht has been supported recently by inflows into Thai bonds and equities.