Asian currencies rose on speculation a narrowing yield gap will lure investors after some US policy makers expressed concern about raising interest rates too far.
An end to US rate increases, which began in June last year, may stem a flow of capital into dollar assets that caused Asian currencies to drop this year. The Federal Reserve discussed the need "before long" to change its outlook for the benchmark rate, the minutes from the Nov. 1 meeting showed.
"The Fed minutes' indication of a pause in rate hikes could provide some help to Asian currencies because of interest-rate differentials," said Singapore-based Jimmy Koh, head of treasury research at UOB Group, an affiliate of United Overseas Bank, the nation's second-largest lender.
The Korean won strengthened 0.7 percent to 1,036.80 against the US dollar as of 3pm in Seoul, its biggest advance since Oct. 26, according to Seoul Money Brokerage Services Ltd. It cut losses this year to 0.2 percent.
The New Taiwan dollar rose NT$0.139, or 0.42 percent, to NT$33.487, the largest gain since Sept. 2, and trimming a decline this year to 5.2 percent, according to Taipei Forex Inc.
Rising rates in Asia and a slow down by the Fed in its policy my boost regional currencies. Asian central banks are raising rates to curb inflation spurred by higher crude oil prices. South Korea is the world's fourth-biggest buyer of oil.
Taiwan's central bank Governor Perng Fai-nan (彭淮南) on Oct. 26 said the country's interest rates need to be increased because of the risk of inflation. The central bank on Sept. 15 raised its discount rate on 10-day loans to banks by 0.125 percentage point to 2.125 percent, the highest in almost four years.
The Bank of Korea on Nov. 10 kept its key rate at 3.5 percent, after increasing rates from a record low on Oct. 11. The economic expansion is taking shape and faster inflation can't be ruled out, central bank Governor Park Seung said on Nov. 10.
Thailand's central bank raised its benchmark interest rate by half a percentage point on Oct. 19 to 3.75 percent, the highest since the bank adopted an inflation-targeting policy in May 2000.
The Fed has raised rates 12 times since June last year to 4 percent.
The won had its biggest advance in a month on speculation some exporters will convert overseas earnings to settle their month-end accounts, said Roh Sang-chil, a Seoul-based currency dealer at Kookmin Bank, South Korea's largest lender.
The won fell 0.9 percent in the past three days, the largest three-day decline since Nov. 7.
"Exporters may come to sell the dollar because of the month-end requirement," Kookmin's Roh said.
Elsewhere in Asia, the Singapore dollar climbed 0.4 percent to S$1.6949, Thailand's baht rose 0.2 percent to 41.15, the Indonesian rupiah was at 10,056 and the Indian rupee climbed 0.2 percent to 45.7307. The Philippine peso strengthened 0.2 percent to 54.30, according to the Bankers Association of the Philippines.
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Fed hints that rate hikes may end soon
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