SINGAPORE: The South Korean won and the Malaysian ringgit sagged on Wednesday as the dollar managed to hold firm after U.S. Federal Reserve Chair Janet Yellen's testimony the previous day was seen as relatively balanced.
The dollar's generally firm tone seemed to be spilling over into Asian currencies, said Masashi Murata, currency strategist for Brown Brothers Harriman in Tokyo.
"The general market sentiment is that the dollar is starting to show a bit of resilience...and some short-covering is taking place," Murata said, adding that there was some caution toward Asian currencies in the wake of their recent rally.
Against a basket of major currencies, the dollar touched a one-month high on Wednesday.
The won hit a 2-1/2-month low versus the dollar after comments from South Korea's finance minister and central bank governor increased expectations of a rate cut.
Data showing that China's economy grew slightly faster than expected in the second quarter helped the won trim some of its losses.
Market participants said Yellen's congressional testimony on Tuesday offered few fresh hints on the outlook for monetary policy and sounded relatively balanced.
Yellen said the one thing that might prompt the Fed to raise rates earlier or faster is if hiring and wages take off in an unexpected way.
She added, however, that U.S. labour markets are far from healthy and signalled the Fed will keep monetary policy loose until hiring and wage data show the effects of the financial crisis are "completely gone."
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