Fed officials signal rate increase possible this year ReutersEmerging currencies taking a Fed hit.Asian currencies weakened Tuesday after U.S. Federal Reserve officials suggested interest rates could be raised as early as next month, but the region’s major stock markets gained modestly ahead of a reading on Chinese manufacturing. The Malaysian ringgit USDMYR, +1.0580% fell by 0.5% against the U.S. dollar while the Thai baht USDTHB, +0.2772% and Indonesian rupiah USDIDR, -0.10% each fell by about 0.3%. The Shanghai Composite Index SHCOMP, -2.19% gained 0.9%, leading most of the region higher. As Chinese President Xi Jinping makes his first state visit to the U.S., the benchmark is down 38% from its June peak, after a selloff that rattled global markets in August. In his first interview with foreign media since the skid began, Mr. Xi said that the government’s intervention in its stock market was necessary to “defuse systemic risks.” On China’s nearly 2% devaluation of the yuan, which had investors questioning whether the slowdown in China’s domestic economy was worse than previously thought, Mr. Xi said that said the reduction in foreign reserves that followed is normal “and there’s no need to overreact to it.” Hong Kong’s Hang Seng closed up 0.2% HSI, -2.26% . Shares in Southeast Asia, though, were down, as their currencies fell. Indonesia’s JSX JAKIDX, -0.73% was off 0.6%. The dollar DXY, +0.00% rose overnight to levels reached before last week’s Fed decision to leave interest rates unchanged. Regional Fed presidents Jeffrey Lacker of Richmond, Va., James Bullard of St. Louis and John Williams of San Francisco signaled in speeches that many central-bank objectives had been met and that Thursday’s decision was a close call. The Wall Street Journal Dollar Index BUXX, +0.12% which measures the dollar against a basket of 16 currencies, rose overnight to its highest level since Sept. 10, at 88.49 overnight. It was last at 88.33. “The reinstatement of long positions in the U.S. dollar is helping calm Asian stock markets [and] easing Asian currencies,” said Evan Lucas, a strategist at brokerage IG. Stock trading in the region has been relatively muted this week, with Japanese markets shut for a national holiday until Thursday. “It makes things more cautious in terms of trading,” Mr. Lucas said. Investors are looking to a reading on Chinese manufacturing activity for September, due Wednesday from Caixin Media Co. and research firm Markit Ltd. The August reading was the lowest in more than six years.“The reinstatement of long positions in the U.S. dollar is helping calm Asian stock markets [and] easing Asian currencies.” Evan Lucas, IG Worse-than-expected economic growth in the first half for most Asian economies and a delayed global recovery led the Asian Development Bank to cut its regional forecasts for this year and next. The region’s GDP will grow 5.8% in 2015 and 6.0% in 2016—down in both cases from 6.3% previously forecast—the Manila-based development lender said in a report Tuesday. In the latest assessment on China, ADB cut that country’s growth forecast to 6.8% from 7.2% and said that developing Asian economies closely linked with China need to explore “new avenues,” adjusting to slower Chinese growth driven more by domestic consumption and less by investment. http://www.marketwatch.com/story/asian-currencies-slide-as-s...