SINGAPORE: Most emerging Asian currencies rose on Tuesday on growing hopes that major central banks will take fresh steps to boost global growth and ease the euro zone's debt crisis, though sustained economic worries limited gains in regional units.
Hedge funds lifted the Malaysian ringgit and the Singapore dollar, while the Taiwan dollar gained on inflows from foreign financial institutes.
The Philippine peso and the Thai baht advanced on buying by interbank speculators.
The appreciation came as the euro rose to near a two-month high against the dollar before the European Central Bank's policy meeting on Thursday, when investors hope it will announce long-awaited details of a debt-buying scheme to help indebted euro zone members.
Hopes for decisive action were boosted on Monday after ECB President Mario Draghi was reported as saying purchases of sovereign bonds of up to three years maturity by the ECB did not constitute state aid.
Federal Reserve Chairman Ben Bernanke on Friday said stagnation in the US labor market was a "great concern," re-igniting expectations of the Fed's imminent stimulus and supporting emerging Asian currencies.
"In the short term, an ECB announcement of bond buying will boost Asian FX, while a new round of QE from the Fed will do the same," said Sacha Tihanyi, senior currency strategist for Scotiabank in Hong Kong, referring to quantitative easing.
But some dealers said expectations for the ECB's steps have been priced in.
"The ECB will complicate the picture on Thursday with further policy easing, which will weigh on the euro and put a floor for now under dollar/Asia," said Callum Henderson, global head of FX research with Standard Chartered Bank in Singapore.
Investors were also awaiting US Institute for Supply Management manufacturing data later in the day, which may justify any further Fed easing.
Similar business surveys on Monday indicated a spreading contraction in manufacturing around the world in August as European problems took a deeper toll on their economies.
Amid a sluggish global economy, export-dependent emerging Asian countries may not be happy with their currency gains, analysts said.
"Slowing global activity and subdued regional inflation suggests NJA policymakers would tolerate, if not welcome, modest currency depreciation," Barclays said in a note, referring to non-Japan Asia.
RINGGIT
The ringgit strengthened past a 200-day moving average at 3.1067 per dollar and tried to clear the 76.4 percent Fibonacci retracement at 3.1015 of its depreciation late August.
Macro funds and leveraged names bought the Malaysian currency.
The local unit is technically seen heading to 3.0920, its strongest on Aug 23 and Aug 24 once the 3.1015 resistance is cleared.
TAIWAN DOLLAR
The Taiwan dollar gained as foreign financial institutions and foreign banks bought it on expectations for policy steps from the Fed and the ECB.
Foreign financial institutions also bought the island's currency in non-deliverable forwards (NDFs) market, betting on further gains in the Taiwan dollar, dealers said.
The local unit also found support the euro's gain above $1.26 and a firm Chinese yuan.
PHILIPPINE PESO
The Philippine peso rose as interbank speculators chased it on a firm euro, although some traders took profits when the peso was stronger than 41.90 per dollar.
A European bank dealer in Manila said it is difficult to add bullish bets in the peso, saying the market appeared to hold enough short dollar positions.
"I wouldn't be surprised if there is some corporate dollar demand here," the dealer said.
BAHT
The baht gained, tracking stronger Asian peers, with gold prices at 5-1/2 month high.
Investors were reluctant to buy the Thai currency around its previous high of 31.15 to the greenback, awaiting the ECB's meeting, dealers said.
But the local unit may find further support if gold prices rise further, prompting gold investors in the country to sell dollars, they added.
Gold is popular among Thai investors, and rises in gold prices have a tendency to spur dollar-selling by such gold players and vice versa, traders said.
SINGAPORE DOLLAR
The Singapore dollar tried to strengthen past resistance at 1.2437 per US dollar, the 76.4 percent retracement of the city-state's currency's August weakening.
Hedge funds bought the local unit, while domestic traders sold it on rallies, dealers said.
The supplies from domestic banks boosted caution over possible intervention by the central bank to slow down its appreciation.
WON
The South Korean won eased as local oil importers bought dollars for payments.
The won weakened to 1,133.2 per dollar as interbank speculators joined the dollar bids.
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