Most Asian currencies eked out narrow gains on Monday as hopes of a partial resolution to the festering trade dispute between the United States and China by next month whetted risk appetites. The gains, however, were capped as the dollar firmed ahead of a US Federal Reserve meeting this week where policymakers are expected to cut interest rates but emphasise their reluctance to ease policy further.

Also, the overall trading activity was light in the region owing to holidays in Singapore, India and Malaysia. Sino-US trade tensions, which have roiled global financial markets for more than a year, would be reduced if the first phase of a deal between the world's top two economies can be signed next month in Chile. On Friday, the US Trade Representative's office and China's Commerce Ministry said officials are "close to finalising" some parts of a trade agreement after high-level telephone discussions.

Investors are also awaiting the developments from the meetings late this week of the US Federal Reserve and Bank of Japan. "A rate cut from the Fed looks a done deal this week as it takes out more insurance against elevated external risks," ANZ Research said in a note on Monday. "Forward policy guidance may point to the Federal Open Market Committee taking some time out to observe the impact of recent cuts."

The dollar index against a basket of six major currencies stood at 97.849, near its highest in more than a week. The Korean won led gains on Monday, strengthening as much as 0.4% to 1,168 against the dollar, its best intraday gain in a week. The Chinese yuan put on as much as 0.2% to touch its strongest level in two weeks.

The Taiwan dollar gained up to 0.2%, while the Philippine peso and the Indonesian rupiah advanced slightly. The Singapore dollar was almost unchanged in thin offshore trading. The Thai baht weakened as much as 0.2% on the day to 30.210 against the dollar after gaining for two consecutive sessions.