Most Asian currencies edged up on Tuesday as a bit of appetite for risk returned one day after trading volumes were slashed by North Korea's most powerful bomb test. "Beyond the initial dips in risk assets and bids in safe havens early Monday, market sentiment has proved to be fairly resilient, rightly seeing through the current North Korean tensions as a continuous drama that waxes and (usually) wanes," Mizuho Bank said in a research note.
The Singapore dollar inched up against the US dollar, after a survey showed activity in the export-heavy economy's factories expanding at its fastest pace in almost three years in August. The South Korean won edged up slightly against the dollar after falling to a near two-week low on Monday, the day after North Korea tested what it said was an advanced hydrogen bomb for a long-range missile..
While the won has been undermined by simmering tensions in the Korean peninsula, South Korea's economy has seen fairly strong growth this year. The country's current account surplus widened to a five-month high in July at a seasonally adjusted $7.02 billion from $5.08 billion in June, central bank data showed on Tuesday.
"While it has been stable against the dollar in a 1,110-1,160 range since April, the won suffered knee-jerk sell-offs whenever North Korea's missile tests provoked the United States," DBS Group said in a research note. The Thai baht and the Indian rupee edged down slightly.
The Philippine peso edged up to a near two-week high against the dollar on Tuesday. The annual inflation rate quickened for the second straight month in August to 3.1 percent, from 2.8 percent in July, due mainly to higher food prices. "The impact of the inflation data is relatively limited on the peso. Rather, markets have been looking at the nation's balance sheet, which is expected to be much weaker and as such, the peso has been underperforming among Asian currencies," said Gao Qi, a Singapore-based FX strategist at Scotiabank.
The Chinese yuan, which rose against the dollar in the past three sessions, fell from a 15-1/2 month high against the greenback. It was not impacted by a private survey showing the services sector in August expanded more quickly, underpinning views that the world's second-largest net creditor remains on solid footing.
The Caixin/Markit services purchasing managers' index rose to 52.7 in August, its highest reading in three months, from 51.5 in July. The official midpoint fixing for the yuan "was set higher than what the market expected, which could explain the slight decline in the yuan today," said Gao.