SINGAPORE: Most emerging Asian currencies rose on Tuesday as the dollar snapped its 10-day winning streak and investors took profit amid concerns over higher US Treasury yields and the growing risk of trade protectionism.
The Chinese yuan rebounded from a near 8-1/2-year low hit on Monday as the central bank set its daily guidance rate stronger for the first time in 13 sessions.
South Korea's won led gains among regional units, with offshore funds unwinding bearish bets following weakness in the dollar.
Gains in the yuan and the won powered the Taiwan dollar .
The US dollar retreated from a 13-1/2-year high against a basket of six major currencies. The greenback has rallied on rising US Treasury yields that have been supported by expectations of increased fiscal spending and higher inflation in the United States under President-elect Donald Trump's administration.
Higher Treasury yields have driven foreign investors out of emerging Asia. In addition, regional financial assets have come under further pressure from Trump's protectionist stance on trade.
"EM/Asian currencies may see a brief reprieve in the short term but background concerns surrounding the incoming US administration's posture towards trade agreements may keep the downside for USD-Asia shallow," said Emmanuel Ng, foreign exchange strategist at OCBC Bank, in a note.
Trump on Monday outlined plans for his first day in office including a formal declaration of his intent to withdraw from the Trans-Pacific Partnership, or TPP, trade deal, which he called "a potential disaster for our country."
Some Southeast Asian currencies eased with the Indonesian rupiah tracking lower government bond prices .
WON
The won earlier appreciated more than 1 percent as foreign investors were set to extend their buying spree in Seoul's main stock market for a fourth straight session.
The South Korean currency pared some of its earlier gains as traders doubted the won would appreciate further.
BlackRock's head of active investing for Asia said North Korea's nuclear threat and the risk of a presidential impeachment in the democratic South have turned the Korean peninsula into Asia's biggest unknown for global investors.
TAIWAN DOLLAR
The Taiwan dollar found further support as local shares jumped more than 1 percent on demand from foreign financial institutions.
The currency pared some of its gains as local importers bought the US dollar for payments around 31.850.
The central bank has not been spotted intervening to stem the Taiwan dollar's appreciation, traders said.
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