The Philippine peso and Indonesian rupiah gained against a broadly weaker dollar on Friday, but other Asian currencies were steady as investors waited for an expected Federal Reserve rate cut next week. The high-yielding peso faced resistance after hitting a three-week high at 46.3 per dollar in local trade, which was up almost 0.4 percent from Thursday's close.
The rupiah, another high-yielder, steadied near 9,380 per dollar after rising as far as 9,366, its strongest level in more than two weeks. "I think it's more of a weak dollar story. Probably we are seeing some carry trades in action again," said a trader in Manila.
"We will probably see more selling interest in the dollar if the 46.30 level breaks," he added. The peso, the second-strongest currency in Asia this year behind the Indian rupee, has gained nearly 1.8 percent since Wednesday. Central bank data on Friday showed that remittances from Filipinos working overseas rose 4.6 percent in July from a year earlier, accelerating from a rise of 1 percent in June.
The Malaysian ringgit rose as far as 3.476 per dollar, up about a fifth of a percent from late Asian trade on Thursday.
The South Korean won steadied near 928.30 per dollar after hitting a one-month high at 927.8, as a finance ministry official warned that the authorities would take action if the won rose excessively. "There might be further verbal intervention, but I don't think there will be real action from the Bank of Korea until it gets to 913," said a trader in Seoul, referring to a level last seen in late July. "We still need to watch out for that."
The dollar held near a 15-year low against a basket of currencies as investors waited for data on US retail sales due later on Friday for clues on whether housing market troubles are hurting the wider economy.
The credit market squeeze and fears of a US recession are expected to lead the Fed to cut its key funds rate by at least 25 basis points when it reviews policy next week. Such a cut could help global stock markets, but market players are unsure about the impact on Asian currencies.
"If the main focus is on the Fed being proactive and helping to restore some confidence in growth, it could be taken as positive," said David Mann, a currency strategist at Standard Chartered Bank. "However, the actual rate cut itself will be a signal things are going to get worse before they get better," he said.
Yiping Huang, chief Asian economist at HSBC, said Asia would benefit from any Fed monetary easing - he is expecting 50 basis points next week and another 25 basis points later in the year. "But in a likely scenario where the cuts are not sufficient to prevent slowing US growth momentum, we should stay cautious on the outlook for Asian assets, including currencies and equities," he said in a note to clients.