The South Korean won led gains among emerging Asian currencies on Wednesday as fears of an immediate military conflict in Ukraine subsided and the Chinese yuan extended gains. The yuan rose as traders said the central bank was spotted reducing its intervention in the market after having engineered a sudden depreciation of the yuan since last month.
South Korea's won gained as investors added bullish bets following its gains in overnight non-deliverable markets.
Local importers, however, bought dollars for payments, limiting the won's appreciation, traders said.
The Thai baht gained as Bangkok shares hit a near three-month high, while some investors took profits on the second best-performing emerging Asian currency of the year.
The Taiwan dollar advanced on inflows from foreign financial institutions for the island's stocks.
Thailand's baht gained as Bangkok stocks hit a near three-month high. The Indonesian rupiah was higher a day after the government sold 15 trillion rupiah ($1.3 billion) in bonds with lower yields.
"This should provide a modicum of support for Asian assets today, and indeed regional equities are better bid," Scotiabank said in a research note.
Still, investors took profits from gains in emerging Asian currencies after China's Premier Li Keqiang said the country will the extend yuan floating rate.
The remarks at China's annual parliament meeting came amid growing expectations that Beijing will widen the yuan's trading band.
"It's likely to occur within days or weeks," said Suresh Kumar Ramanathan, head of regional interest rate and FX strategy at CIMB Investment Bank in Kuala Lumpur.
"It will affect negatively for Asia ex-Japan (currencies), given the CNY is on a weakening trend the last few weeks," Ramanathan said, tipping the Malaysian ringgit, the rupiah, the Philippine peso and the Taiwan dollar to stay on the defensive.
China needs a weaker yuan to achieve this year's official growth target of 7.5 percent, he added.
The recent weakness in the renminbi has put pressure on other emerging Asian currencies, given the region's economic dependence on the world's second-largest economy.
The won gained as its NDFs rose overnight, while dollar demand from importers limited its upside. Traders suspected that those dollar bids may have been linked to South Korea's payment to Iran for crude oil imports.
The baht edged up as Bangkok shares rose as much as 0.9 percent to 1,357.39, their highest since Dec. 13.
Foreign investors bought a combined net 2.5 billion Thai baht ($77.0 million) in local stocks.
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