The Indian rupee hit a three-month high on Thursday as speculation about a Chinese yuan revaluation continued despite official Chinese comments playing down the prospect of an imminent move. The rupee gained as much as 0.2 percent to 43.39 per dollar, its highest since February 3. It was also helped by expectations of increased foreign investment after the government's approval of a plan to scrap a 10 percent voting rights cap on non-founding shareholders in banks. The Taiwan dollar rose as much as 0.2 percent and the Philippine peso 0.4 percent, both hitting their highest levels in seven weeks because of the yuan factor and in anticipation of foreign inflows.
If the yuan is revalued, other Asian countries may feel they can let their currencies rise without harming export competitiveness. Currency traders believe many Asian currencies are undervalued.
"Comments from China's finance minister highlighting an unlikely near-term move in the yuan failed to spur profit-taking on Asian currencies," said Craig Chan, a currency strategist with the Royal Bank of Scotland in Hong Kong.
Expectation of an immediate yuan revaluation eased after China's finance minister said speculation about a change in its currency regime made it hard to bring in reforms right now.
"We will actively and prudently push forward this reform but I believe under the current situation that speculation on the renminbi (yuan) exchange rate is very hot and that pushing forward this reform is very difficult," Jin Renqing said on Wednesday on the sidelines of the annual meeting of the Asian Development Bank in Istanbul.
But non-deliverable forward contracts on yuan still suggested speculation remained strong, with the three-month contract factoring in a 2.2 percent appreciation in the yuan in late Asia trade versus 2.1 percent early on Thursday. It is still below a record 2.7 percent seen on Wednesday.
In Taipei, dealers suspected the authorities were buying US dollars to control the pace of gains in the local currency. Trade volume in the local market soared to $1.33 billion from $886 million on Wednesday. Foreign investors were net buyers of Taiwan shares for an eighth session in a row.
Trading in other Asian currencies was slow with South Korea, Thailand and Indonesia on holiday. Japan and China were also on holiday.
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