SINGAPORE: Most emerging Asian currencies eased on Wednesday as the Chinese yuan lost ground and on a broad dollar strength ahead of the result of a US Federal Reserve policy meeting, but many regional units were set to see monthly gains on capital inflows.
Investors hesitated to build up aggressive positions before key data from major economies such as US jobs numbers on Friday and China's manufacturing activity index on Thursday. Most Asian financial markets will be closed on Thursday for the Labou Day holiday.
The yuan hit a 18-month low against the dollar after the central bank fixed its daily mid-point weaker and on increasing corporate dollar demand.
Offshore spot yuan also fell to its lowest since October 2012.
Taiwan's financial regulator is seeking to crack down on banks' sales of currency derivatives amid increasing client complaints about losses on yuan investment products after the renminbi's recent slide.
The dollar rose against a basket of six major currencies with the euro down after slower-than-expected German inflation.
The Malaysian ringgit led daily losses among emerging Asian currencies as investors cut bullish positions.
South Korea's won eased, with foreign exchange authorities suspected of intervening to stem its appreciation and on dollar demand from local importers.
Still, most emerging Asian currencies were poised to record monthly gains and they may appreciate further in May even though investors are awaiting the outcome of the Fed's two-day policy meeting later in the day.
"All bodes well with searching for yields," said Andy Ji, Asian currency strategist for Commonwealth Bank of Australia in Singapore, adding the Indian rupee and the Indonesian rupiah may lead regional gains once uncertainties about elections in those countries ease.
"So even with sell in May in terms of risk sentiment, I don't see USD/Asia get a significant lift. Broad USD weakness is going to linger," Ji said, referring to US dollar/Asian currency pairs.
In April, the won outperformed emerging Asian currencies, having risen 3.1 percent against the dollar. That would mark its largest monthly gain since September last year.
Stocks and bond inflows attracted by strong economic fundamentals have supported the South Korean currency.
The Philippine peso has gained 0.6 percent while the Thai baht has appreciated 0.5 percent.
Singapore's dollar and the Taiwan dollar have each risen 0.1 percent.
However, the yuan has lost 0.8 percent in April, set to suffer a fourth consecutive month of depreciation which have more than erased last year's gain.
The rupiah has fallen 1.7 percent and the rupee has dipped 0.7 percent as investors took profits from the two best performing emerging Asian currencies so far this year on election uncertainties.
RINGGIT
The ringgit fell as most of its non-deliverable forwards eased on selling from US names, traders said.
Local importers also bought the dollar for payments.
The Malaysian currency also came under pressure from daily fixing-related dollar demand and as some investors sold the ringgit against the Singapore dollar.
TAIWAN DOLLAR
The Taiwan dollar gained as exporters bought it for month-end settlements, while trading was subdued as local financial markets are closed on Thursday for the Labour Day.
The island's economy grew in the first quarter at its fastest pace in over a year as strong domestic consumption helped offset exports, preliminary data showed earlier.
Some currency traders, however, said the data did not help the Taiwan dollar much as investors are still watching if the growth is sustainable.
The Taiwan dollar's upside was limited by a weaker yuan and as investors were also awaiting the result of the Fed policy meeting later in the day.
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