Emerging Asian currencies firmed on Thursday as the dollar weakened after the US Federal Reserve surprised markets by bringing its three-year tightening drive to an earlier than expected end.
The Fed on Wednesday abandoned plans for any interest rate hikes this year amid signs of an economic slowdown, and said it would halt the steady decline of its balance sheet in September.
The Indonesian rupiah strengthened as much as 0.6 percent against the dollar, touching its highest level since February 28. The rupiah has outperformed its peers by a vast margin this year after declining nearly 6 percent in 2018.
Bank Indonesia is due to release a policy decision later in the day, and is widely expected to keep interest rates unchanged for a fourth straight month.
Indonesia's finance minister said on Thursday that the Fed's forecast for no rate hikes in 2019 "will be good for global economy" as markets will be calmer than in 2018, when the US central bank raised rates four times.
"The dovish Fed surprise may trigger a bullish re-think of ranges for emerging Asia forex markets. However, a sustained bullish break-out may still be contingent on a US-China (trade) deal with a potential currency stability clause especially for Chinese yuan and allied currencies," economists at Citi said in a note.
"In the meantime, high yielding Asia forex may outperform."
The South Korean won strengthened 0.3 percent, in tandem with the local equity benchmark index, while the Taiwan dollar edged higher.
Central banks in Taiwan and the Philippines are also expected to leave rates unchanged later in the day, with investors looking for any hints of future easing after the Fed decision.
Meanwhile on the trade front, US President Donald Trump warned on Wednesday that the United States may leave tariffs on Chinese goods for a "substantial period" to ensure Beijing complies with any trade agreement.
US-China trade talks are set to resume in Beijing next week, the first face-to-face talks since Trump delayed a March 1 deadline to avert a rise in tariffs on $200 billion worth of Chinese imports.
The Thai baht appreciated 0.2 percent, after data released on Thursday showed that the country's customs-cleared exports unexpectedly rose in February, after contracting for three consecutive months.
Indian financial markets were closed for a public holiday.
The Chinese yuan strengthened as much as 0.4 percent, rising to an over eight-month high against the dollar.
China's central bank on Thursday lifted it official yuan midpoint to the strongest level in eight months at 6.6850 per dollar.
"While the comments from Trump on the trade front suggest that there is still a risk we might not get a deal, for now markets have brushed it aside," Khoon Goh, head of Asia research
at ANZ Banking Group (Singapore) said.
Currency has been a point of contention among US and Chinese officials during trade talks, with Washington seeking assurance China will not depreciate its currency to offset the impact of any US measures.Earlier this month, People's Bank Of China Governor Yi Gang said that China's central bank has exited from regular intervention on foreign exchange, and that China will absolutely not use the exchange root to boost its exports.