Asian currencies rise

Asian currencies rose on Tuesday as reports of talks between the United States and China soothed investor concerns about a trade war, whetting their appetite for riskier assets. Reflecting this improved sentiment, MSCI's broadest index of Asia-Pacific shares outside Japan was up about 1 percent on Tuesday.
Global risk sentiment slumped last week when US President Donald Trump moved to impose tariffs on Chinese goods with Beijing threatening to retaliate, risking a trade war or at least threatening the synchronised recovery in the global economy.
On Monday, Premier Li Keqiang said China and the United States should maintain negotiations, reiterating pledges to ease access for American businesses. Andy Ji, a strategist for Commonwealth Bank of Australia in Singapore, said markets were in a risk-on mode on Tuesday.
"Markets are more optimistic for a regional trade deal and evading the trade war," Ji said. Another positive for regional currencies was this week's sharp rise in China's yuan.
The yuan extended its gains on the dollar to a seven-week high on Tuesday after the central bank set its official fixing at the strongest level in more than 2 1/2 years. "We believe China will tolerate more appreciation in the yuan to help reduce its merchandise trade surplus with the United States, particularly if the dollar index remains subdued," Scotiabank said in a report.
The dollar's index against a basket of six major peers held steady at 89.042, close to Monday's five-week low of 88.979. The South Korean won led the regional gainers, rising about 1 percent against the dollar.
Strong oil prices propelled the Malaysian ringgit to a gain of more than 0.50 percent, while the Singapore dollar also edged higher. "The stronger ringgit will buoy the Singapore dollar," Vishnu Varathan, head of economics and strategy for Mizuho Bank in Singapore said in a note.
The Indian rupee was up 0.13 percent at 64.775 per dollar, its highest in a month. The rupee's gain was driven by a surprise cut in the government's borrowing programme for the fiscal year starting April.
The government said on Tuesday it plans to borrow 2.88 trillion rupees ($44.45 billion) over April-September, 22 percent lower than the amount for the same period last year. However some analysts said the relief for the Indian rupee and bonds is temporary.
"The fact remains that the government needs to borrow more to finance a wider fiscal deficit," ING said in a report. "We expect fiscal slippages to remain among the main headwinds for local financial assets, including government bonds and the rupee this year."