Most Asian currencies slip

Most Asian currencies fell against a stronger dollar on Wednesday, with the Indonesian rupiah declining the most, after China's central bank set the midpoint of the yuan weaker than a key threshold for the first time in nearly two months.

The People's Bank of China set the midpoint rate at 7.0012 per dollar, 186 pips or 0.27% weaker than the previous fix of 6.9826. The Chinese yuan slipped 0.1%.

"The weakness in Asian currencies probably stem from the weaker yuan fixing today, which was fixed weaker than 7, which suggest that Chinese authorities are comfortable with further weakening in the currency," said Khoon Goh, head of Asia research at ANZ.

Worries of the economic impact of the coronavirus outbreaks continued to dampen investor sentiment as the death toll from the epidemic passed 2,000 in the mainland, although a fall in the number of new cases offered a slight reprieve.

Meanwhile, Asian units also faced pressure from a stronger greenback, as the dollar, against a basket of currencies, hovered near a four-month high.

"With the euro, the biggest component in the dollar index, offering little resistance, coupled with the risk-aversion stemming from the coronavirus outbreak, the US dollar has scant reason to come off these elevated levels," said Han Tan, a market analyst at FXTM, in a note.

The Taiwan dollar and the South Korean won also declined about 0.1% each.

Against the broader trend, the Philippine peso continued to trade fairly stronger as the impact of the virus outbreak on its economy is expected to be relatively less severe.

The Thai baht saw marginal gains after comments on Tuesday that the Thai government's support measures and the passage of a delayed budget bill will help ease the economic blow from the coronavirus.

The Indonesian rupiah declined 0.4% to its weakest level in over a week.

"Rupiah has been performing quite strongly recently," Goh said, so the weakness today is not surprising.

The rupiah had strengthened about 1.7% over the month of January allowing investors to book profits.

The Bank Indonesia is likely to resume its easing cycle at its policy meeting on Thursday, according to a Reuters poll, to provide a cushion for the expected economic impact from the virus outbreak.