Most Asian currencies rose on Thursday in tandem with firmer stocks, but the positive sentiment was contained by the deadly attacks in India's financial hub Mumbai and Thailand's political strife. The Indonesian rupiah gained 1 percent to 12,150 per dollar, helped by suspected dollar-selling intervention by the central bank.
"The rupiah open at 12,150, Bank Indonesia was briefly in the market," said a trader in Jakarta. The Philippine peso rose as far as 48.82 per dollar, up 0.6 percent from Wednesday's close. It later pulled back to 48.93 as Indian commandos and armed police laid siege to gunmen holding foreigners hostage after attacks that killed at least 101 people.
"The unrest in India and Thailand tends to support risk aversion," said a trader in Manila. Stocks in the Asia-Pacific region outside of Japan rose 2.8 percent, set for a fifth straight day of gains, helped by China's hefty interest rate cut.
India's financial markets are shut on Thursday, but analysts expect the Indian rupee to come under selling pressures in the near term due to the Mumbai attacks. "This will be negative for the rupee/dollar, but again I want to stress that the impact will be short-lived," said Joseph Tan, Asia chief economist at Credit Suisse.
OCBC FX strategist Enrico Tanuwidjaja said he believed foreign funds may hold inflows to India for the time being. "The Reserve Bank of India is likely to guard the dollar/rupee on possible spikes," he added.
The rupee, one of the worst performing currencies in Asia with a year-to-day loss of 20 percent against the dollar, closed at 49.48 on Wednesday after hitting a 10-day high at 49.25. The Thai baht fell as low as 35.38 per dollar, its weakest level since February 2007 as pressures built on Thailand's military to intervene to help contain widespread civil unrest.