Most Asian currencies rose against the US dollar on Friday but fear of intervention restricted gains and political worries weighed on the Philippine peso and Indonesian rupiah.
The Taiwan dollar rose about a quarter of a percent to hit its highest level since May 2001. The South Korean won challenged 1,140 per dollar, its highest since November 2000, and the Singapore dollar touched a seven-week high of 1.6700 to a dollar.
However despite the gains, dealers in Singapore said the Taiwan dollar had been hit by uncertainty ahead of a court hearing of an opposition lawsuit urging a recount of President Chen Shui-bian's election victory.
Dealers said talk in the market was that the central bank would try to cap the rise beyond 32.80.
For the won, dealers said they believed authorities wanted to hold the currency from rising through the 1,140 level.
Data showing South Korea's foreign exchange reserves had risen $550 million, to a record $163.6 billion in March, further raised suspicion the central bank had recently been buying dollars.
However analysts said rising inflation could convince policy-makers to let the won strengthen.
Finance Minister Lee Hun-jai said the consumer price index for 2004 was now expected to grow by 3.3 percent from last year, 0.3 percentage point higher than an earlier forecast.
The market was also cautious on the Singapore dollar, ahead of a central bank monetary policy review due on April 12. Dealers said they suspected the central bank had bought US dollars in recent sessions to keep the currency from breaching 1.6700.
The Monetary Authority of Singapore (MAS) does not have a benchmark interest rate and instead manages monetary policy by targeting the Sing dollar in an undisclosed trade-weighted band. Given tame inflation and a high unemployment rate, most analysts said the central bank was unlikely to tighten policy via a stronger Sing dollar.
The central bank re-centered the currency band in July, amounting to a one-off one percent devaluation without changing its "neutral bias" on monetary policy.
Dealers said the risk was that the central bank might re-adjust the centre of the band to where it was before July. That would be a tightening of policy and would mean a stronger Sing dollar.
The Philippine peso fell further from Wednesday's six-week highs to around 56.10 amid worries over a possible ratings downgrade ahead of the May 10 presidential polls.
Ping Chew, director of sovereign and international ratings at Standard & Poor's, told reporters in Manila political developments ahead of the elections could prompt a change in the country's ratings, already two notches below investment grade.
Indonesia's rupiah touched a one-week low as the market braced for Monday's parliamentary election.
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