Dollar firms in Asia before Fed meeting

Tokyo - The dollar picked up in Asia on Tuesday ahead of a US central bank policy meeting, with investors looking for signs of an earlier-than-expected interest rate hike.

In afternoon Tokyo trade, the dollar strengthened to ¥107.22, after briefly falling below the ¥107 level earlier in the day. The unit bought ¥107.18 in New York on Monday.

The euro slipped to $1.2935 from $1.2940 in US trade, while it fetched ¥138.68 against ¥138.69.

The pound dipped to $1.6175 from $1.6234 in New York as investors keep a nervous eye on Thursday's Scottish independence vote, which could lead to the break-up of the United Kingdom and hammer its economy.

Speculation that the Federal Reserve will bring forward its timetable to raise interest rates helped push the dollar past the ¥107 mark last week for the first time in nearly six years.

The Fed - which has said it would keep interest rates low for a "considerable time" after ending its massive stimulus - is widely expected to further reduce the monetary easing programme after its meeting, setting the stage for a full termination at the end of October.

Market players are looking for any change in the Fed's statements, which could give a clue about when it will start raising its key rates.

Speaking to a business audience, Bank of Japan Governor Haruhiko Kuroda on Tuesday kept up his rosy view of the economy and the BoJ's bid to hit a 2.0 inflation target next year -- despite a sharp contraction in second-quarter growth.

"I assure you that, through the BoJ's monetary-policy management, prolonged deflation will be overcome and an economy based on a moderate inflation rate of 2.0% will be achieved," he said.

Markets have been betting that Japan's central bank will be forced to expand its stimulus to counter a downturn in the world's number three economy.

The dollar was mixed against other Asia-Pacific currencies.

It slipped to 1 036.75 South Korean won from 1 038.18 won on Monday and to Sg$1.2636 from Sg$1.2663, while it was unchanged at 32.27 Thai baht.

The dollar edged up to Tw$30.16 from Tw$30.04, to 44.33 Philippine pesos from 44.00 pesos, to 61.08 Indian rupees from 61.06 rupees and to 11 960 Indonesian rupiah from 11 903 rupiah.

The Australian dollar slipped to 89.92 US cents from 89.99c, while the Chinese yuan fetched ¥17.41 against ¥17.46.