SINGAPORE: Emerging Asian currencies on Tuesday took a breather as the US Federal Reserve starts a two-day policy meeting later in the day and caution spread ahead of the British referendum on whether to quit the European Union.
Most regional currencies started the day firmer on the dollar's broad weakness in overnight markets, but fragile risk sentiment cut their upside in thin trading. Those units eased against the safe-haven yen.
The Fed is widely expected to stay pat at this week's Federal Open Market Committee, but investors are awaiting any clues on the timing of a further interest rate hike.
The US central bank is seen increasing borrowing costs in September and possibly as soon as July, a Reuters poll showed.
"USD/Asia FX are torn between FOMC and Brexit," said Andy Ji, Asian currency strategist for Commonwealth Bank of Australia in Singapore.
"A hawkish FOMC and uncertainties regarding Brexit obviously keeps USD/Asia supported on USD demand, although in the region currencies with current account surplus should outperform on safe-haven demand," said Ji. He added the South Korean won and the Singapore dollar would be among them.
Economists fear that any decision by Britain to leave the EU would tip Europe back into recession. Voters appear divided ahead of the June 23 referendum, with the "Out" campaign widening its lead over the "In" camp, according to two opinion polls published by ICM on Monday.
PHILIPPINE PESO
The Philippine peso fell nearly 0.3 percent, underperforming regional peers.
Manila shares lost 1.6 percent, far more than regional slides.
Foreign investors were net sellers in the local equity market in the previous two consecutive sessions, the Philippine stock Exchange data showed.
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