Most Asian currencies firmed against the greenback on Thursday, led by the Thai baht and Malaysian ringgit, amid waning concerns about the economic impact of the Omicron coronavirus variant and a slowing Chinese factory-gate inflation.
The Thai baht, the worst performing currency in the region, marked its third straight day in the black after it firmed 0.2% to 33.39 per dollar, its highest in two weeks. The Malaysian ringgit advanced slightly to a one-week peak.
Indications that Omicron may not be as bad as feared and a slowing factory-gate inflation in China, Southeast Asia's largest trading partner, supported risk appetite in the region.
"This is fairly intuitive and expected in the context of (and exaggerated by) a harsh sell-off/risk off on Omicron last week, being met with encouraging news of early studies downplaying its severity and threat posed," analysts at Mizuho Bank said.
BioNTech and Pfizer said a three-shot course of their COVID-19 vaccine was able to neutralise Omicron in a laboratory test, an indication that booster shots could be key to protection against the variant.
The US dollar index edged up to 96.012, but traded near its one-week low as Omicron fears eased, pushing benchmark 10-year Treasury yields up.
Meanwhile, China's yuan weakened slightly to 6.3451 per dollar, but hovered near its more than three-year peak supported by a stronger yuan midpoint set by the People's Bank of China as well as liquidity easing measures.
"The recent easing measures by the People's Bank of China spurred risk-on sentiment onshore, and could have contributed to this down-move in the USD/CNY," analysts at Singapore bank OCBC said in a note.
"Going forward, expect to see a new range between 6.3300 and 6.3700 for the pair, with a downside bias. The rest of USD-Asia pairs are similarly heavy."
In Southeast Asia, the Indonesian rupiah firmed 0.2% to hit its highest level this month. The 10-year benchmark bond yields slipped for a second day, down 8 basis points over the period after having risen nearly 20 basis points for two weeks amid the Omicron-fuelled volatility in the markets.
Elsewhere, South Korea's won appreciated 0.2% to hit an over five-week high, while Singapore dollar and the Philippine peso weakened 0.2% each.
Most regional equities were up, with Singapore, Malaysia, Indonesia and Thailand advancing between 0.3% and 1%.
Highlights:
** Indonesian 10-year benchmark yields fall 4.3 basis points to 6.339%, extending losses from prior session
** China's factory-gate inflation slows in November
** Thai Nov consumer confidence at 7-month high amid reopening
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