China's decision to end its peg to the US dollar triggered an immediate surge in Asian and other emerging market currencies in a sign of increasing confidence in a sustained economic recovery.

Economists said the jump also reflected a belief that Beijing's action would make central banks in other emerging markets less likely to intervene to hold down their currencies against the dollar to avoid a loss of competitiveness with China.

“What this does is allow central banks a lot more comfort in allowing currencies to appreciate,” said Tai Hui, at Standard Chartered in Singapore. “What we have seen today is that even the possibility of greater renminbi flexibility has brought back some risk appetite, which had disappeared in the last few months on the back of the problems in Europe.”