Emerging Asian currencies firmed on Wednesday on hopes for resolution of the Sino-U.S trade war after the United States opened the door to extending the 90-day truce that is due to end on March 1.
President Donald Trump on Tuesday said he could see letting the deadline for reaching a trade agreement with China slide a little if the two sides were close to a complete deal.
Investors responded by buying emerging Asian currencies, which strengthened across the board after softening earlier this week.
DBS Group Research said in a note that an extension "could avoid further disruptions to the global economy from a potential increase in US tariffs on Chinese goods".
However, DBS warned that an extension "will only be possible if China accedes to US's push for enforcement mechanisms on areas such as forced technology transfer and intellectual property protection".
The Indonesian rupiah, the second-best performing Asian currency in 2019, led Wednesday's gains, firming 0.4 percent.
The Malaysian ringgit strengthened to its highest since July.
The Indian rupee climbed 0.2 percent to a more than one month high. This comes after news consumer prices rose at a milder pace than anticipated, strengthening views that the central bank - which trimmed the key rate on Feb. 7 - could again cut the key interest rate in April.
The South Korean won and Singapore dollar, currencies of economies that are exporters of electronics, rose 0.3 percent and 0.2 percent, respectively.
The trade war has weighed on exports of both Singapore and South Korea. The city-state's shipments had their worst decline in more than two years in December. The Chinese yuan firmed to a two-week high, while the Thai baht added 0.2 percent.
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