Most Asian currencies firmed in year-end trade on Thursday as comments from China boosted expectations of Washington and Beijing signing a trade deal early in the new year.
The Chinese Foreign Ministry on Wednesday said their economic and trade teams were in close communication about detailed arrangements for the Phase 1 deal's signing and other follow-up work.
On Tuesday, US President Donald Trump said he and Chinese President Xi Jinping would have a signing ceremony to sign the deal agreed to this month.
Beijing has not yet confirmed specific components of the deal that were released by US officials, but a spokesman for China's Commerce Ministry said last week the details would be made public after the official signing.
The Chinese yuan, however, weakened 0.1% after Wednesday's strong gains. The central bank lifted its official midpoint prior to the market open, breaching a key threshold.
The Philippine peso firmed the most in the region, strengthening 0.3%.
The South Korean won and the Taiwan dollar strengthened 0.2% and 0.3%, respectively. Trade in these export-oriented countries have taken a hit from the prolonged tariff dispute between the world's top two economies. Thereby, easing tensions between Washington and Beijing supported the two currencies.
The Indonesian rupiah slipped as markets resumed trading after a two-day break, with a rise in crude oil prices weighing on the currency.
The Singapore dollar traded largely flat, with data showing November industrial output unexpectedly fell 9.3% from a year earlier because of steep declines in electronics and pharmaceutical production.
"The wording of the deal and its impact on reducing broader global trade uncertainties especially related to the electronics sector will be crucial factors that determine whether the story for Singapore's manufacturing sector will materially change," Mizuho said in a note.
The People's Bank of China set the official yuan midpoint rate at 6.9801 per dollar, the strongest in over 4-1/2 months, to reflect strong gains made a day earlier.
Supported by year-end corporate dollar selling, the onshore spot yuan strengthened against the dollar in holiday-thinned trade on Wednesday, rising past the key seven-per-dollar level.
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