The Thai baht led gains among Asian currencies on Tuesday, scaling a two-month peak, as hopes of a resolution of a political logjam in Thailand and a softer United States dollar improved investor sentiment.
The baht surged 0.9%, while investors dealing in stocks remained cautious with the local share market trading about 0.2% higher.
Move Forward Party (MFP) leader and prime ministerial candidate Pita Limjaroenrat, the surprise winner of the May 14 general election, said on Monday that an eight-party alliance seeking to form the country's next government reaffirmed their backing for Pita to become the prime minister.
"Anticipation of a political resolution in the country is improving foreign investor sentiment which is leading to the appreciation of the baht and is expected to rally the currency going ahead," said Poon Panichpibool, markets strategist at Krungthai Bank.
The US dollar index, which measures the greenback against a basket of six currencies, fell 0.15% to 99.753 in Asia trade, languishing near a more than one-year low hit on Friday.
"Firmer US activity print could see the US dollar finding support but overall, we still expect some consolidation in the lead-up to next week's Fed meeting," analysts at OCBC said in a note.
Thailand's Ministry of Tourism and Sports said on Tuesday the country received around 14.15 million foreign visitors from January to July 16 and expects to exceed 15 million by the end of the month.
Separately, the Chinese yuan also inched higher after the country's central bank set the daily midpoint rate at 7.1453 per dollar, 0.18% weaker than the previous fix.
Data released on Monday showed China's economy grew at a frail pace in the second quarter as weakening of demand at home and abroad continued to weigh on sentiment.
OCBC analysts said that when the U.S. dollar trend is down, the yuan may enjoy a breather, however, "issues in China won't go away on its own."
Stimulus support is still needed to support the property sector and domestic demand, they added.
The South Korean Won was also one of the major gainers, rising 0.4% while the local share market eased 0.4%.
"We still look for the off chance that China's reopening will gain steam later in the year and could possibly drive the won and Asian currencies stronger," analysts at Maybank said.
Stocks in Singapore and Indonesia fell 0.2% and 0.5%, respectively, while shares in the Philippines added 0.1%.