The Philippine peso hit a six-year high on Friday, recovering from losses the previous day triggered by concerns about further policy tightening in China, and most other Asian currencies also rose.
The Indian rupee, the best-performing currency in Asia this year, gained about 0.4 percent to 41.90 per dollar, bringing its cumulative gains so far this year to 5.7 percent. The high-yielding peso rose 0.45 percent to 47.51 per dollar, its highest since March 2001, while the Indonesian rupiah strengthened as far as 9,078 per dollar.
A trader in Manila said the 47.50 level is key technical resistance for the peso and he feared the central bank could step up its intervention in a bid to limit the currency's rise. "People went long (on the dollar) yesterday with the fear of a China fallout. Now that fear seems unfounded and people started selling dollars with the central bank the main buyer," he said.
"The peso looks like it is going stronger, but we are still worried about the 47.50 level. That level may be broken depending on how much the central bank is willing to buy dollars." The central bank left interest rates unchanged on Thursday in line with market expectations, but it unveiled measures to clamp down on rapid money supply growth.
Asian stocks rebounded on Friday after a sell-off on Thursday fanned by worries of fresh policy tightening in China. The Asian selling failed to cause a global slide like the one in February. The MSCI's measure of Asia Pacific stocks excluding Japan rose nearly 1.2 percent on Friday.
Asian currencies weakened on Thursday after China's 11.1 percent economic growth in the first quarter and accelerating inflation fuelled fears of more policy tightening to head off overheating in the world's fourth-largest economy.
"It appears that risk appetite has recovered fairly quickly. I think the markets take confidence in the fact that the US Dow Jones was fairly stable overnight," said Ben Simpfendorfer, a currency strategist at Royal Bank of Scotland.
The Japanese yen slipped to 118.66 against the dollar as more investors returned to carry trades, in which they borrow the Japanese currency to fund the purchase of high-yielding assets.
The yuan eased to 7.719 per dollar from its post-revaluation high of 7.716 hit on Thursday, but many analysts believe the pace of yuan appreciation will pick up. The South Korean won gained nearly a fifth of a percent to 927.2 per dollar after retreating briefly in response to a central bank warning about speculative currency trading.