SINGAPORE -- The Malaysian ringgit hit a decade high and other Asian currencies also firmed on Wednesday as expectations of a US rate cut strengthened, a move that would result in greater yield differentials with Asia.

"The whole world is selling US dollars. It is the trend now as the US is going to cut rates more," a trader in Malaysia said.

However, most regional currencies kept to tight ranges as investors waited for data from the US on activity in the service sector. A Reuters poll showed analysts expected a contraction in the Institute for Supply Management index.

A slump in the service sector, though expected to be milder than January's record dip, would fuel expectations of an aggressive interest rate cut by the Federal Reserve but also raise risk aversion by pointing to a deep economic slowdown.

Traders said cautious sales of the US dollar would dominate Wednesday's currency trading.

The Singapore dollar inched up 0.2 percent to a 12-year high of 1.3885 per dollar, taking its gains from a week ago to 1.1 percent.

Analysts suspected the central bank might intervene as the currency is estimated to be at the top of its undisclosed policy band.

DBS attributed its steady climb to the broad US dollar weakness and inflation in Singapore, which was at its highest in nearly 26 years in January, raising expectations that the central bank might allow the currency to appreciate more quickly.

"We remain mindful that short-covering can set in for dollar/ Singapore dollar before the next push to this level," it said in a research note, referring to its year-end target for the currency of 1.30 to 1.35 per US dollar.

The Malaysian ringgit rose by 0.3 percent to hit 3.18 per dollar, its highest since October 1997, having risen 1.0 percent in the past week.

"Holding the Malaysian ringgit can get a better rate of return than the US dollar," a trader in Kuala Lumpur said.

The Taiwan dollar strengthened by 0.6 percent to 30.78, shy of a three-year high of 30.6770 hit on Friday, helped by positive sentiment ahead of Taiwan's presidential election on March 22.

February inflation figures for Taiwan are due to be released later in the day. A survey conducted by Reuters showed analysts expected a 3.1 percent annual rise in consumer prices, up from January's figure of just under 3.0 percent.