A trade truce between the United States and China prompted a relief rally among most Asian currencies on Monday, with the Chinese yuan and Thai baht leading the gains.
The troubled negotiations are set to resume after Washington offered concessions including no new tariffs and an easing of restrictions against Huawei, while Beijing agreed to make unspecified new purchases of US farm products.
"Investors (have) heaved a massive, but exhausted, sigh of relief that both the US and China opted to push the reset button and restart trade negotiations amidst other pleasantries - now we'll have to see, whether it all sticks," Stephen Innes, managing partner at Vanguard Markets Pte Ltd said.
The last major round of Sino-US trade talks collapsed in May, rattling financial markets and renewing concerns the standoff between the two biggest economies could trigger a global recession.
The weekend trade truce, agreed between US President Donald Trump and his Chinese counterpart Xi Jinping on the sidelines of the G20 summit in Japan, sent the yuan to its highest level since June 21.
The baht was the biggest mover, up as much as 0.6% to its highest level in more than six years as the resurgent risk sentiment saw investors largely shrug off slightly weaker inflation data in June.
The trade-dependent Taiwanese dollar also joined the rally, firming to a near two-month peak.
The relief in markets following the weekend Trump-Xi meeting was underscored by the broadening global impact of the Sino-US trade war.
Private surveys showed factory activity in South Korea and China shrinking, hurt by slowing global trade.
"Cracks in both the US and Chinese economy argues for them to find common ground to end the trade hostilities, but if both parties continue to approach the discussion from an ideological perspective and from a position of strength a solution could be difficult to achieve," Jason Daw, Head of EM Strategy at Societe Generale said.
The won traded 0.1% lower. Sentiment was also hurt by a trade row between Seoul and Tokyo which will see Japan tighten restrictions on exports of high-tech materials used in smartphone displays and chips to South Korea.
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