Asian currencies rallied on Friday as investors globally continued to show strong appetites for risk. The weak dollar contributed to gains. The Philippine peso hit a near six-month high. Asian shares were near a record high, while the euro held firm and was close to a near three-year high against the dollar.
"The global reflation trade continued to power equities, commodities and currencies higher into the new year," DBS said in a research note. "The reflation story in Asia was best reflected by Southeast Asian currencies." The dollar fell against basket of currencies, failing to capitalise on better than expected jobs data from the United States. A weaker dollar prompts investors to seek higher yields in Asian markets and bodes well for their respective currencies.
However, the greenback may witness a light rebound on stronger US payroll data for December, due later in the global day. Among Asian currencies, the Philippine peso rose as much as 0.2 percent to 49.705 against the dollar, its highest since June.
The Philippine annual inflation rate held steady in December, which might imply that a central rate hike may not be imminent. Some economists have said price pressures could prompt a hike this year. The peso was on track to end the week 0.4 percent higher.
The Chinese yuan, which declined the past two days, rose about 0.2 percent to a near four-month high against the dollar. The People's Bank of China set the midpoint for the yuan at its highest level since May 2016. The yuan was also on track to end the week 0.4 percent higher.
The Malaysian ringgit was the best performer among Asian currencies on Friday, gaining about 0.3 percent to 3.991 against the dollar. Bolstered by stronger oil prices, the ringgit breached the psychologically important 4.0 level for the first time since August 2016. Malaysia's exports for November grew more than expected, implying that one of Asia's largest economies stood on stable footing. The ringgit was on track for its best week since September 2017.