SINGAPORE: Most emerging Asian currencies inched up slightly on Thursday on hopes that a full-blown trade war between the United States and China can be averted.
The dollar was a shade higher at 106.845 yen, having pulled higher from a low of 105.990 set the previous day.
Global markets sank on Wednesday after China unveiled tit-for-tat tariffs against key US imports, hours after Washington released a list of Chinese goods it planned to target.
But sentiment recovered after the United States expressed willingness to negotiate a resolution to the trade fight.
Neither side has set an effective date for the measures, giving them some room to maneuvre.
Still, gains in Asian currencies were muted, reflecting lingering nervousness about the potential fallout for the region's trade-reliant economies.
Nomura believes China's hi-tech parts suppliers such as Taiwan, Malaysia, South Korea and Singapore could be hit harder by US trade measures than China itself.
Holidays in China, Hong Kong and Taiwan also thinned Asian trade.
"It's a slow day. Despite the apparent improvement in global risk appetite levels overnight, we (EM Asia FX markets) are obviously not out of the woods yet with respect to global trade war tensions," said Emmanuel Ng, FX strategist at Oversea-Chinese Banking Corporation Ltd.
India's rupee gained as much as 0.3 percent ahead of a central bank policy decision later in the day (0900 GMT). The central bank is expected to keep rates on hold but remain cautious on inflation despite an easing in price pressures in recent months.
The South Korean won reversed early losses and rose as much as 0.3 percent.
Ng explained that the bond inflows have been strong for South Korea, lending support to the currency.
The Malaysian ringgit and the Thai baht both edged up 0.1 percent, while the Singapore dollar slipped slightly.
Indonesia's rupiah and the Philippine peso traded flat.
SOUTH KOREA'S WON
The won rose 0.2 percent on Thursday, reversing course after posting losses in early trade.
South Korea's finance minister said on Thursday the trade tussle between the United States and China was being closely watched and that the country had prepared measures for various scenarios.
South Korea, along with China, avoided the currency-manipulator label in twice-yearly US Treasury report, but was kept on a currency "monitoring list".
The following table shows rates for Asian currencies against the dollar at 0427 GMT.
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