Most emerging Asian currencies rose on Thursday as the yuan's decline slowed following Chinese central bank efforts to calm global markets after its devaluation earlier this week. Regional currencies found more support as China's move to weaken the yuan by about 4 percent raised doubts over the timing of when the US Federal Reserve will raise interest rates. The Peoples' Bank of China (PBOC) said that there was no basis for further depreciation in the yuan, given strong economic fundamentals.
The yuan weakened slightly to a fresh 4-year low, but the pace of decline eased. On Wednesday, currency traders said Chinese state-run banks sold dollars on behalf of the central bank to stem the renminbi's fall. Malaysia's ringgit gained as central bank governor Zeti Akhtar Aziz said Bank Negara Malaysia does not see a need to peg the currency, easing concerns over capital controls to defend the unit.
The South Korean won jumped after traders on Wednesday said the foreign exchange authorities were estimated to have spent $4 billion in the previous two sessions to slow the currency's decline. Singapore's dollar advanced after the central bank on Wednesday expressed intentions to support the currency. The Monetary Authority of Singapore (MAS) also said the current policy remains appropriate despite some speculation of easing. Regional currencies pared earlier gains as the yuan was expected to stay volatile.
"Asian currencies remain fragile, especially if RMB remains volatile in the near term," said Khoon Goh, senior FX strategist for ANZ in Singapore, referring to the renminbi. "The fixings and their intervention stance remain important in helping to calm the market down and prevent any further depreciation pressure. There is still a lot of uncertainty as markets digest the new currency regime." China's decision to devalue the currency on Tuesday roiled global financial markets, dragging other Asian currencies to multi-year lows.