Asian currencies trimmed some of their early gains on Friday as the offshore premium on the yuan was eroded and regional stock markets declined.
The Singapore dollar fell past 1.69 to 1.6921, a level seen on Tuesday and the Korean won made marginal losses but stayed in a tight range around 1,145/1,146 a dollar.
"Some of the funds are buying back in yuan NDFs," said a trader in Singapore, citing the buying back of dollars in the offshore yuan market as the reason for the decline in regionals.
Chinese yuan non-deliverable forwards, which had been gradually moving to price in a higher premium on the yuan this week on renewed speculation ahead of a Group of Seven meeting, retreated slightly.
One-year NDFs were quoted at 2,200/2,300 points, compared with the morning's 2,600 points and Thursday's 2,800.
At 2,200, they price in a 2.7 percent appreciation in the yuan in a year.
The yuan is effectively pegged around 8.28 per US dollar.
China's invitation to the G7 meeting in Washington on October 1 and comments from several US and Chinese policymakers provided the trigger for the latest speculation of a yuan revaluation.
"We don't expect anything specific to emerge from the meeting, but the fact that China has been invited and growth in the region is still holding up well and the fact that we are going into a US presidential election in November probably indicates there will be positioning in the region going into that meeting," Allison Montgomery, senior currency strategist at Westpac Bank, Sydney, said.
On Friday, it appeared some of that positioning was unwinding.
Some analysts said the yuan was merely benefiting from capital flows into Asian equities, and Friday's fall in stock markets in Tokyo, Seoul and Taipei seemed to vindicate their view.
The Thai baht came off 41.18, a peak it hit in July and again earlier this week, to end Asian trading flat at 41.30.
The Indonesian rupiah was the least affected. It came off a 9,000 per dollar level - a two-month high struck in early deals - but retained some gains from Thursday as markets positioned for Monday's presidential election.
The latest surveys show former general Susilo Bambang Yudhoyono commands a lead over incumbent Megawati Sukarnoputri, but operators are positioning themselves for stability after the drawn-out process, which should support the currency.
The Sing dollar failed to hold on to gains near 1.6866 in early deals, with some analysts cautioning it had risen too far inside the undisclosed trade-weighted band the authorities manage it in.
J.P. Morgan said in a note the Sing's trade-weighted exchange rate had moved to levels 1.1 percent stronger than the mid point of that band, and it would sell the currency against the components of the basket.
Analysts have their own estimates of the band and its components, of which the dollar, euro and yen are believed to comprise a major proportion.
The Monetary Authority of Singapore manages monetary policy by targeting the currency within this nominal effective exchange rate (NEER) band.
Robert Rennie, strategist with Westpac Bank, Sydney, differed. He said the Sing dollar had been trading weak since the Monetary Authority of Singapore announced in April a policy tightening through a modest appreciation of the currency.
It would strengthen heading into the next MAS policy review in October, he said.
"We would argue that the recent strength seen in the Sing dollar NEER has merely taken it back to levels more consistent with the domestic economy," Rennie said in a note.
"As such, there remains upside potential for Sing dollar on a number of axes as we move into the MAS meeting October 11."