Investing.com– Asian currencies were mostly lower on Tuesday as markets were cautious ahead of interest rate decisions from major central banks, including the US Federal Reserve.
The Fed is expected to cut 25 basis points on Wednesday, but will signal a slower pace in 2025.
Expectations of a slower rate cut path have underpinned the US dollar and created downward pressure on Asian currencies.
They were mostly steady in Asian hours on Tuesday, and were slightly higher.
Asia FX falls ahead of regional interest rate decisions
The Japanese yen pair was largely unchanged. Reuters had reported that the Bank of Japan was likely to remain unchanged this week, compared to earlier expectations for a hike.
The Indonesian rupiah pair rose 0.4% as the country's central bank is expected to keep its key interest rate steady on Wednesday, to support the currency.
The Bank of Thailand is expected to keep unchanged on Wednesday after an unexpected rate cut in October.
The Thai baht exchange rate rose to 0.2%.
In the Philippines, the peso pair was down 0.1% ahead of the Bangko Sentral ng Pilipinas' (BSP) on Thursday. The central bank is expected to cut its key policy rates by 25 basis points for the third time in a row.
Dollar hovers near 3-week high, weighing on Asian currencies
The dollar index reversed course to gain a bit and edged closer to its highest level since November 26, even as traders braced for a Fed rate cut next week.
After Wednesday's rate cut, that suggests a roughly 37% probability of a single 25-point cut or no further cuts through 2025, up from about 21% just a week ago.
Back in Asia, the Chinese yuan pair edged in 0.1% higher. Data on Monday showed China's growth slowed sharply in November, reflecting continued weakness in consumer spending.
South Korea's pair of winners entered 0.2% lower amid ongoing political unrest in the country. South Korean President Yoon Suk Yeol was impeached in parliament on Saturday over his martial law order.
Elsewhere, the Singapore dollar pair rose slightly, while the Australian dollar pair was slightly lower.
The smallest stock dividend was 84.918 rupees.
