Asian currencies weakened on Wednesday, with the Chinese yuan leading losses as the currency resumed trade after a long market holiday that saw a further spike in Sino-US tensions over the origin of the coronavirus pandemic.
The yuan lost as much as 0.6% to hit its weakest level in more than a month before paring losses as the currency caught up with the frayed sentiment following threats of new tariffs by the United States in retaliation over the virus outbreak.
Meanwhile, new measures by regional central banks eased some of the pressure on currencies as a slew of bleak data show the brutal impact of pandemic on their economies.
The Indonesian rupiah pared losses after the central bank governor pledged to provide as much liquidity as required to support economic growth, while vowing to prioritise interest rate policy to maintain rupiah IDR= stability.
Southeast Asia's largest economy recorded its weakest pace in economic growth since 2001 in the first quarter.
Meanwhile, the South Korean won firmed 0.5% after the country's central bank said it would suspend auctions of US dollars from the currency swap deal with the Federal Reserve given the stabilising market conditions. The easing of lockdown measures in different parts of the world has lifted investor sentiment and supported some riskier assets in the past few sessions.
The Philippine peso firmed 0.3%. The country is set to report its first-quarter economic growth figures on Thursday.
"Similar to Indonesia, we expect the GDP growth in the Philippines to start reflecting the impact of the COVID-19 pandemic as it slows sharply to 1% YoY in Q1," a Mizuho note said. Philippines' trade deficit widened slightly in March as both exports and imports contracted sharply.
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