"US-China trade talk progress (following reports that 6 MoUs are in the works) is helping to support sentiment," said Christopher Wong, a senior FX Strategist at Maybank. China's yuan strengthened for a fourth consecutive day, breaking below 6.7 per dlr to make fresh three-week highs. The yuan was boosted by a Bloomberg report earlier this week that the United States was seeking to secure a pledge from China that it will not devalue its currency as part of a trade deal.
The Indian rupee rose 0.2 percent, on the back of higher dollar inflows related to an external commercial borrowing, traders said. However, most other regional currencies dropped against the greenback as minutes from the Fed's Jan. 29-30 meeting released on Tuesday didn't bolster views that the US central bank would completely refrain from hiking rates this year.
"Interestingly, a dig through the text implies they would be prepared to hike rates if inflation accelerates and that the majority of governors judge rates to be neutral right here: i.e. no easing bias," said Jeffrey Halley, senior market analyst at OANDA. The Thai baht led regional declines with a fall of 0.3 percent, while the Malaysian ringgit shed 0.15 percent. Sharp gains in crude prices also undermined the oil importers currencies, like the Indonesian rupiah and the Philippine peso. The rupiah edged lower ahead of its central bank policy meeting later in the day.
A Reuters poll predicted that the Indonesian central bank would keep its policy rate on hold. The central bank hiked its rates six times in 2018, the most in the region.