[TOKYO] Asian currencies from the South Korean won to Malaysian ringgit picked up against the dollar Wednesday with confidence returning to trading floors as regional equity markets rose after a global rout.
But the greenback losses were likely to be short lived as the Federal Reserve readies to lift the near-zero federal funds rate for the first time in almost a decade, analysts said.
"It's hard to see how any Asian currency will post sustained, substantial gains in the fourth quarter, with losses versus the US dollar likely to be the norm," Sean Callow, a senior currency strategist at Westpac Banking in Sydney, told Bloomberg News.
"We expect volatility to remain elevated as Asian policymakers struggle with regional deceleration in growth, and yet more weeks and months of debate over the Fed policy outlook." Dealers will pay attention to a speech by US central bank head Janet Yellen later in the day for cues on the direction of US monetary policy, her first since indicating last week that a hike in interest rates remains on the table for 2015.
Washington will release September unemployment figures on Friday, with the improving labour market a key factor in favor of the Fed's plan to raise interest rates.
A strong reading will add to calls on the Fed to move, putting pressure on emerging economies as investors withdraw their cash to seek better returns in the US.
The yen, considered a safe haven asset in times of turmoil and uncertainty, broadly weakened against its peers on Wednesday as investors' risk tolerance rose.
The greenback strengthened to 119.82 yen from 119.75 yen Tuesday in New York, while the euro gained to 134.90 yen against 134.77 yen.
"Yesterday, the yen strengthened beyond the mid-119 level to the dollar as stocks sold off, so today, with stocks rebounding, there's an unwind of risk-off trades," said Akira Moroga, manager of currency products at Aozora Bank in Tokyo.
In other trading, the won rose more than a percent against the US unit, the Taiwan dollar was up 0.72 per cent, and the ringgit was 0.32 per cent higher.
The Indonesian rupiah gained 0.25 per cent, the Singapore dollar rose 0.18 per cent, and the Thai baht was up 0.19 per cent.
The Australian dollar rose 0.30 per cent, trading at 70.06 US cents up from 69.73 US cents on Tuesday in Tokyo.