Asian currencies mostly rangebound

The Indonesian rupiah hit a one-week low on Monday as investors limited exposure to riskier assets, while Asian currencies mostly stuck in narrow ranges ahead of a Federal Reserve meeting later this week.
The rupiah stabilised near 9,020 per dollar as investors took profits from the US currency's recent gains, after falling as far as 9,033 in early trade, dealers said.
"Asian currencies are largely consolidating with the cautious tone on stock markets today," said Thio Chin Loo, currency strategist at BNP Paribas. The MSCI index of Asian stocks outside Japan eased almost 0.6 percent after hitting an intraday record high last Friday.
Recent volatility in high-yielding currencies may persist in the near term, but their retreats may provide an opportunity for investors to re-build long positions, analysts said. The rupiah has shed 3 percent over the past month due to risk aversion fuelled by concerns about rising global interest rates.
"Carry trade out-performance is here to stay - any correction is a fantastic opportunity to get in at better levels," said Sue Trinh, currency strategist at RBC Capital Markets.
The Taiwan dollar fell a tenth of a percent to about 32.77 per US dollar, giving up its early gains, while the South Korean won gained a fifth of a percent to 926.3 per dollar. Shahab Jalinoos, currency strategist at ABN Amro, said in a research note that he continued to favour currencies such as the rupiah, rupee, ringgit and peso despite recent gyrations.
"In terms of regional shorts, we still have a bias towards North Asia given the higher exports dependence and vulnerability to higher commodity prices in economies such as Korea and Taiwan," he said. The Japanese yen stuck near a 4-1/2-year low against the dollar and all-time low versus the euro staying pressured as the Bank of Japan is seen not in a hurry to raise rates. A Federal Reserve policy statement issued at the end of a two-day Federal Open Market Committee (FOMC) meeting will likely be the main focus for the market on Thursday.
The Fed is widely expected to hold the federal funds rate steady at 5.25 percent, but the market will read the Fed statement to see how the central bank's views issues like growth and inflation. "The market is in a holding pattern ahead of the FOMC," said Trinh. The Malaysian ringgit fell a tenth of a percent to 3.465 per dollar, unfazed by official comments reaffirming the authorities' tolerance for gradual currency appreciation.
Malaysia's second finance minister Nor Mohamed Yakcop said on Monday that the ringgit's current level was not too strong and not too weak. The comments followed that of central bank governor Zeti Akhtar Aziz on Sunday that the bank would act if there was disruptive volatility in the ringgit, but noted the currency was moving in an orderly manner with two-way flows.
"If you read the comments carefully - they indicated that there will be no problem as long as there is gradual movement," said a dealer in Kuala Lumpur. He said the ringgit, which has shed 2 percent against the dollar over the past month, may rise to 3.30 by year-end.
The yuan was little changed at around 7.62 per dollar. China's central bank governor Zhou Xiaochuan said on Saturday that inflation may rise despite tighter monetary policy and a further increase in interest rates cannot be ruled out.