BEIJING: Rising Asian shares buoyed most regional currencies on Friday, with the Philippine peso leading the pack after the central bank in Manila slashed interest rates but eased the impact by scrapping a low-interest deposit scheme.
The peso steadied near 45.75 per U.S. dollar, up half a percent from Thursday's close, after suspected central bank intervention pushed it back from a day high of 45.73.
"The central bank's rate cut yesterday seems to be taken in a positive light," a trader in Manila said. "The cut is positive for the equity market, and with the equity market strong, there is foreign interest and that causes the peso to strengthen."
The central bank surprised investors by cutting its key rates by 150 and 175 basis points.
In an accompanying move, the central bank removed a tiered system, under which interest rates were reduced by up to 400 basis points on banks' deposits in excess of 10 billion pesos.
Sean Callow, currency strategist at Westpac, said he believed that the relaxation was compatible with the central bank's cut of its 2007 inflation forecast to a range of 2.6 percent to 3.1 percent. "Markets should quickly factor in at least one rate cut in coming months," he said in a note.
In Indonesia, the rupiah climbed 0.3 percent to 9,028 against the U.S. dollar.
The Thai currency climbed for the 12th day on speculation that measures to curb the baht's advance would take time to be effective. The baht rose 0.2 percent to 33.25 versus the U.S. dollar in onshore trading, the highest in almost a decade, and climbed 1 percent to 30.60 offshore. The government will relax limits on how much Thais can invest abroad and boost domestic borrowing to alleviate pressure on the baht, Finance Minister Chalongphob Sussangkarn said.
The South Korean currency strengthened 0.2 percent to 916.90 against the U.S. dollar, reaching the highest level since December and bringing the week's gain to 0.3 percent.
The won had a fifth weekly advance after the central bank on Thursday raised the benchmark interest rate to a six-year high of 4.75 percent.
In Malaysia, the ringgit had a fifth weekly gain, rising 0.2 percent to 3.4430 against the U.S. dollar.
Elsewhere in Asia, the Singapore dollar gained 0.1 percent to 1.5146. The Taiwan dollar rose 0.1 percent to 32.762, while the Vietnamese currency was little changed at 16,135.
In Europe, the euro traded at $1.3771, from $1.3791. The U.S. dollar traded at ¥122.40, from ¥122.05, and at 1.204 Swiss francs, from 1.2012 francs. The British pound traded at $2.0323, from $2.0333.
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