The yuan jumped against the dollar on Tuesday ahead of a COVID-19 press briefing in China that is spurring hopes of a potential easing in the country's strict pandemic restrictions following an unprecedented episode of unrest.
The offshore yuan surged 1.2% to 7.1607 a dollar after a statement from the Chinese government said experts from the National Health Commission and two other agencies involved in disease control and prevention would speak at a COVID press conference at 0700 GMT on Tuesday.
The onshore yuan was up 0.66% at 7.1594 per dollar.
"People are getting quite excited about some sort of reopening," said Alvin Tan, head of Asia FX strategy at RBC Capital Markets.
The U.S. dollar, which rallied in the previous session on mounting worries over China's COVID situation, pared some of its overnight gains and moved broadly lower.
The Aussie, often used as a liquid proxy for the yuan, rose 0.8% to $0.6708. The kiwi similarly gained 0.9% to $0.6214.
Sterling strengthened 0.4% to $1.2007.
Police on Monday stopped and searched people at the sites of weekend protests in Shanghai and Beijing, after crowds there and in other Chinese cities demonstrated against the country's strict zero-COVID policy.
Protests have spread to at least a dozen cities around the world in a show of solidarity.
Elsewhere, the euro was up 0.4% at $1.0382, after surging to a five-month peak of $1.0497 overnight.
European Central Bank President Christine Lagarde said overnight that euro zone inflation had not peaked and it risked turning out even higher than currently expected, hinting at a series of interest rate hikes ahead.
Flash euro zone inflation figures for November are due on Wednesday, with economists polled by Reuters expecting inflation to come in at 10.4% year-on-year. Ahead of that, inflation numbers from Spain and Germany are expected later on Tuesday.
"The central bank commentary that we've had this week, including from Lagarde, has got the market on guard for the risk that the ECB is going to raise rates by 75 basis points at its December meeting rather than 50 basis points, which had been a strong consensus up until the last few days," said Ray Attrill, head of FX strategy at National Australia Bank (NAB).
The Japanese yen last traded about 0.3% higher at 138.525 per dollar.
Against a basket of currencies, the U.S. dollar index fell 0.4% to 106.23, after rising 0.5% overnight.
The greenback remained marginally supported by hawkish Federal Reserve speakers overnight.
St. Louis Fed President James Bullard said the Fed needed to raise interest rates quite a bit further, while New York Fed President John Williams and Richmond Fed President Thomas Barkin echoed similar views.
"The Fed rhetoric we've heard from some of the speakers in the last 24 hours is sending a relatively hawkish message, which is somewhat at odds with market pricing," said NAB's Attrill.
Comments from Fed Chair Jerome Powell on Wednesday will be watched for new signals on further tightening, with key U.S. jobs data for November due on Friday. The U.S. central bank is widely expected to hike rates by an additional 50 basis points when it meets on Dec. 13-14.
(Reporting by Harish Sridharan in Bengaluru; Editing by Edmund Klamann)