The South Korean won led gains among emerging Asian currencies on Thursday, as the yuan recovered some of its earlier losses, but investors stayed cautious due to uncertainty over the outlook for the Chinese currency. The won outperformed on demand from exporters for month-end settlements and stop-loss dollar selling. Offshore funds covered short positions in the South Korean currency, traders said.
Taiwan's dollar advanced as exporters sold the US dollar and foreign investors continued to buy local stocks. The Malaysian ringgit gained on oil exporters' bids ahead of the month-end. Investors also covered short positions in the ringgit against the Singapore dollar.
Spot yuan dropped below the official fixing for the second straight day to touch a near seven-month low as the central bank set the currency's daily midpoint weaker, before recovering some of its decline. The renminbi is expected to weaken further as China's authorities are seen determined to dampen speculative bets in the currency, analysts said. The Taiwan dollar gained on exporters' demand for month-end settlements and higher local stocks.
Many local companies chased the yuan on dips on Tuesday when the renminbi fell below the official midpoint rate for the first time since September 2012, according to traders in Taipei. Taiwan's yuan deposits hit a record high of 214.5 billion yuan ($35 billion) in January, according to central bank data.
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