The Thai baht and the Malaysian ringgit firmed on Thursday as Asian currencies benefited from receding worries surrounding the Omicron coronavirus variant, although most stock markets dipped in the last trading session of the year for several exchanges.
Despite a surge in global COVID-19 infections, investors seemed to focus more on positive news about the Omicron variant.
Researchers in South Africa found that T cells, a key part of the immune system's second-line defence, are highly effective at recognising and attacking the Omicron strain, preventing most infections from progressing to critical illness.
The ringgit and the baht firmed 0.3% each, the Indian rupee rose 0.2%, while most other currencies pared gains to trade flat but eyed a stronger weekly finish.
"One would have to say that the renewed risk appetite from international investors is being most strongly expressed in regional Asian currencies at the moment," said Jeffrey Halley, a senior market analyst, Asia Pacific OANDA.
"Asian (stocks) are having a mixed day in contrast, and it appears that some pre-New-Years-Eve book squaring is weighing on markets."
Bangkok shares edged higher, while Malaysia, Jakarta and Singapore shed between 0.1% and 0.3%, in a low-volume session.
Thursday was also the last trading day for currency and stock markets in Thailand, Taiwan and Indonesia, while Singapore will see a shortened session on Friday.
The baht was set to end the year as the worst-performing Asian currency with a 10.3% drop due to a delayed recovery in tourism, a key source of revenue for the Thai economy.
It would be the currency's second consecutive year of losses.
The South Korean won traded flat after having hit a two-week high earlier in the session, while stocks fell 0.5%. The won closed down 8.6% for the year, while shares added 3.6%.
However, the Asian trade bellwether's November industrial output left something to cheer for as it indicated global chip shortage was easing, with Barclays analysts optimistic that supply-side bottlenecks could see a meaningful resolution in 2022.
Chinese shares rebounded from a near 1% drop in the previous session, fuelled by gains in the tech sector even as the pandemic situation in the country worsened.
Philippines equity markets were closed for a holiday and will resume trade on Friday.
Highlights
** Indonesian rupiah among best performing currencies in 2021, eyes closing down 1.6% versus dollar; stocks up more than 10% in 2021
** Thai stocks set for ~14% gain, rebounding from an 8% drop last year, while Taiwan equities head for ~24% rise to be the best performer
** The Chinese city of Xian, in its eighth day of lockdown, reported another 155 local COVID-19 cases, taking the total number to its highest seen in any city in the country this year