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ASIAN currencies were little changed yesterday, after the US Federal Reserve signalled a tightening of monetary policy to prevent inflation from accelerating. The Korean won traded at 1,249.4 per US dollar in the afternoon from 1,250.1 a day earlier, after touching 1,239.38 - the strongest level since June 4.
The Philippine peso declined more than 0.2 per cent to 48.045. Malaysia's ringgit and the Taiwan dollar held steady at 3.542 and NT$32.787 respectively. The Singapore dollar declined to $1.441.
However, RBC Capital Markets felt that Federal Reserve chairman Ben Bernanke's upcoming speech could potentially be the bigger market mover and 'with risk seekers looking for reasons to buy riskier assets (and sell US dollars) a cautious optimistic tone might well open the way to further US dollar selling'.
'Markets may be a little bit cautious with central banks perhaps expected to show a little bit of discomfort toward undue currency appreciation,' said Emmanuel Ng, OCBC economist.
The yen and US dollar rose against higher-yielding currencies. The Japanese currency advanced to 133.40 versus the euro in Tokyo from 134.05 in New York on Monday. It gained to 93.93 per US dollar from 94.19. The greenback climbed to US$1.421 per euro from US$1.4231.
Mr Bernanke said in the Wall Street Journal that at some point the Fed 'will need to tighten monetary policy' to counter the emergence of an inflationary problem. He will later today deliver his semi-annual policy testimony to Congress.
The Korean won strengthened in each of the last five days, its longest winning streak of the year, before a report this week that economists predict will show that gross domestic product (GDP) rose in the last quarter at the fastest pace in five years.
GDP expanded 2.1 per cent in the second quarter from the previous three months, the most since 2003, economists forecast in a Bloomberg survey before a central bank report on July 24.
The Philippine peso fell, having reached a one-month high of 47.46 per US dollar on Monday, on speculation importers were taking advantage of the currency's strength to buy US dollars. The government reported a budget deficit for the first half of 153.4 billion pesos (S$4.6 billion), equivalent to 60 per cent of its full-year target.
The Taiwan dollar rose in each of the last five days, its best winning streak in eight weeks, as China reported a pickup in economic growth and upbeat earnings reports from technology companies suggest demand for the electronic goods produced on the island is strengthening.
The central bank may have bought US dollars yesterday to help 'smooth' volatility, said Leong Wai Ho, an economist at Barclays Capital.
Taiwan's dollar is 'relatively stable', the central bank of Taiwan said in a faxed statement yesterday, when the currency gained 0.5 per cent against the greenback, its biggest advance since June 1. Appreciation may erode the competitiveness of the island's exports, which dropped for a 10th straight month in June as recessions in the US, Europe and Japan curbed demand.
The Thai baht was little changed near this month's high of 33.99 as intervention concerns limited gains. The currency, which has strengthened in each of the last four months, traded at 34.03 per US dollar. Elsewhere, Indonesia's rupiah traded at 10,050 from 10,175 on July 17.
Meanwhile, oil prices hovered near US$64 a barrel yesterday in Asia as investors weighed improving corporate results against weak crude demand.
Benchmark crude for August delivery was up five US cents to US$64.03 a barrel by late afternoon in electronic trading on the New York Mercantile Exchange. On Monday, the contract rose 42 US cents to settle at US$63.98.
Indeed, crude prices have jumped from US$58.78 a barrel two weeks ago as some positive economic data fuels optimism in the market. The Conference Board's index of leading economic indicators improved more than expected in June - marking the third straight month of gains.
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