"A stable yuan could help to shore up sentiment on EM currencies in the region alongside a lower chance of competitive devaluation," said Zhu Huani, an economist at Mizuho Bank in a note. The yuan rose as much as 0.6 percent against the dollar, its biggest intra-day gain in more than a month. The Thai baht and the South Korean won, both gained about 0.5 percent. The baht touched its highest level against the dollar since November 2013 on Wednesday.
A fall in US bond yields also propped up regional assets. The benchmark 10-year US Treasury yield fell for the second consecutive day, ahead of the release of minutes from the Federal Reserve's January policy-setting meeting. New York Fed President John Williams told Reuters he was comfortable with the level US interest rates are at now and that he sees no need to raise them again unless economic growth or inflation shifts to an unexpected higher gear.
The Fed's caution over further rate hikes has given emerging market currencies some reprieve this year, after sharp declines in 2018. Regional central banks are expected to soften their policy stance this year as they face less pressure to defend their currencies and are facing higher capital inflows.
China's central bank has been loosening policy since mid-2018 and India unexpectedly cut rates in February. Both are expected to ease further in coming months. A Reuters poll showed Indonesia's central bank will keep its policy rates on hold on Thursday. The central bank hiked its rates six times in 2018, the highest in the region. The Indonesian rupiah and the Malaysian ringgit both were up 0.3 percent each, on Wednesday.