Most Asian currencies were subdued on Friday as investors locked in gains from the previous session after US Federal Reserve affirmed a dovish stance at its policy meeting this week. The South Korean won, which was on track to firm 0.6 percent this week, was the region's biggest loser on the day, weakening 0.3 percent against the dollar.
South Korea's central bank chief said on Thursday the Fed decision to abandon any interest rate hikes this year eased uncertainties for policymakers in Seoul. But he added it was too early to discuss cutting interest rates in Asia's fourth largest economy due to the lack of clarity on Brexit and China's slowing economy. Among other currencies, Indonesia's rupiah depreciated slightly against the dollar, but was poised to record a weekly gain of 0.7 percent.
Bank Indonesia kept its benchmark rate on hold on Thursday to maintain financial stability, and tweaked some rules to encourage more lending. "We expect Bank Indonesia to continue supporting IDR liquidity to cushion the banking sector from the impacts of the aggressive tightening in 2018," said Eugenia Fabon Victorino, Head of Asia Strategy at SEB Markets.
The central bank said its guidance on the financing-to-funding ratio for commercial banks would move to a 84-94 percent range, from 80-92 percent, effective July 1.
The Malaysian ringgit was largely unchanged after data showed the economy remained in deflation for a second straight month in February due to lower fuel prices.
Bucking the trend, the Indian rupee, which resumed trading after a public holiday, strengthened up to 0.4 percent, and is on track to record its sixth straight weekly gain.
"It is just playing catch-up with on-shore players getting back into the market and reacting to the Fed as the currencies did on Thursday," said Mitul Kotecha, Senior Emerging Markets Strategist at TD Securities.
The Philippine peso strengthened as much as 0.2 percent after Bangko Sentral Pilipinas (BSP) kept its benchmark interest rate steady for a third straight meeting on Thursday.
The central bank also cut its average inflation forecast for this year to 3.0 percent, down from its previous forecast of 3.07 percent.
BSP Deputy Governor Diwa Guinigundo said a further cut in the amount of cash that banks must hold as reserves is always on the table, but needs careful study before an adjustment is considered.
The reserve requirement for banks was cut twice last year to 18 percent.
The peso is among the region's worst performers so far this year, and has weakened on the back of a cut in 2019 GDP forecast and the possibility of cuts in the reserve requirement ratio.
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