SINGAPORE, July 27 — Most emerging Asian currencies eased today amid caution ahead of the US  Federal Reserve’s policy meeting, while weak commodity prices sent the Malaysian ringgit and the Indonesian rupiah to 17-year lows.

Thailand’s baht bucked the regional trend as traders cut their bearish bets with the currency holding from falling past a support level. Singapore’s dollar also gained on demand against the neighbouring ringgit.

The US dollar eased against a basket of six major currencies after a drop in American stock and bond yields.

The greenback’s retreat did not support emerging Asian currencies much as investors were focusing on the monetary policy divergence between the United States and the region.

The Fed is unlikely to raise interest rates on its two-day policy meeting starting from Tuesday, but investors were looking for any clues for the timing of a hike.

“There is still a possibility for some language tweak especially in outlook, coupled with the GDP data,” said Andy Ji, Asian currency strategist for Commonwealth Bank of Australia in Singapore, referring to US second quarter gross domestic product data due on Thursday.

“The market can still price a steeper rate path, which is why we expect USD/Asia to stay very supported.”

Staff economists at the Fed expect a quarter-point US  interest rate increase this year, according to forecasts the Fed mistakenly published on its website.

Ringgit

The ringgit eased 0.1 per cent to 3.8140 per dollar, its weakest since September 1998, as weak commodity prices added to concerns over Malaysia’s sluggish exports.

The Malaysian currency was pegged at 3.8000 between 1998 and 2005.

The central bank was spotted in the market trying to limit further losses in the worst-performing Asian currency so far this year, traders said.

Malaysia’s international reserves fell to US$100.5 billion (RM383.217 billion) as of July 15 from US$105.5 billion as of June 30, central bank data showed on July 23.

“If reserves fall toward USD90 billion, the market may start questioning BNM’s ability to cap spot and concerns over reserve adequacy could start to surface,” Societe Generale said in a research note, referring to Bank Negara Malaysia, the central bank.

“If EM FX remains under pressure, BNM might be forced to let the MYR depreciate well beyond the 3.80 level.”

Baht

The baht rose as traders covered short positions after the currency held from falling past psychological support at 35.00 per dollar.

On Friday, the Thai currency hit 34.95, its weakest since May 2009.

Exporters earlier today bought it for month-end settlements on dips, but corporate demand was not that strong, traders said.

The baht pared some of its earlier gains as customs-cleared data showed exports in June fell 7.87 per cent from a year earlier, missing a 5.00 per cent drop forecast in a Reuters poll. — Reuters