Asian currencies firmed on Tuesday, marking a strong start for the new year as sentiment was boosted by gains in the euro, while a weaker US dollar prompted further interest in Asia, reports Reuters.
The greenback saw its biggest annual drop in 2017 in more than a decade on doubts over the durability of a pick-up in US economic growth following a sweeping tax overhaul, while the euro hovered around a three-month peak.
"I think it's almost aligning mechanically with the stronger euro and weaker dollar. It looks like there was no risk-off, and the dollar is also on a softer footing, so I think these two reasons are conspiring to allow Asian currencies to remain buoyant today," said Vishnu Varathan, senior economist at Mizuho Bank.
However, he added that follow-up gains looked a bit doubtful, adding that there was a bit of upside resistance in a few currencies in the region.
In Asian currencies, the Taiwan dollar was the biggest percentage gainer, rising 0.8 per cent against the dollar to a more than four-year high.
"The Taiwan dollar last Friday hit a similar level but pared gains to close flat...what we're seeing today is just a rebound, which is not a surprise," said Gao Qi, Asia FX strategist at Scotiabank.
The Chinese yuan was also firmer, gaining 0.1 per cent to a near four-month high against the greenback.
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