Malaysia's ringgit rose to the strongest level in more than a decade on speculation a cut in US interest rates will increase demand for Asian assets.
The ringgit posted a second week of gains on signs the Federal Reserve will lower borrowing costs this month to stop US economic growth from slowing.
The currency also climbed as an advance in China's yuan to the highest level since a dollar link was scrapped in 2005 raised optimism that Asian central banks will be more inclined to let their currencies appreciate.
"As the US economy gets bashed, Asia will be the growth story in 2008," Yeo Chin Tiong, head of treasury at OSK Investment Bank Bhd in Kuala Lumpur, said on Friday. "The ringgit should be stronger than this as capital flows into the region."
The ringgit fell 1 percent to 3.2830 per US dollar in Kuala Lumpur compared with 3.3170 a week ago, data compiled by Bloomberg show. The currency may strengthen to between 3.1 and 3.2 this year, Yeo said.
The New Taiwan dollar gave up NT$0.008 against the US currency on Friday to close at NT$32.439. A total of US$764 million changed hands during the day's trading.
The US dollar opened at NT$32.430 and fluctuated between NT$32.389 and NT$32.455.
The Philippine peso logged a second weekly advance on speculation Filipinos working abroad are sending more money home. The peso rose 0.7 percent this week to 41.01 per US dollar in Manila, said Tullett Prebon Plc, the world's second-largest inter-dealer broker.
"As the peso appreciates, overseas Filipinos have to send more dollars home to compensate for the lower exchange rate," said Marcelo Ayes, senior vice president for treasury at Rizal Commercial Banking Corp in Manila. "That is why the volume of dollars coming into the country is rising, giving a boost to the peso."
Remittances account for about one-tenth of the US$117 billion Southeast Asian economy and helped the peso gain almost 19 percent last year, making it the best performing Asian currency.
Indonesia's rupiah posted a weekly decline on speculation record oil prices will increase dollar purchases by the nation's energy importers.
The currency fell for a second day on Friday after crude oil rose this week to above US$100 a barrel, the highest since trading began in 1983.
Bank Indonesia will enter the market to defend the rupiah, Governor Burhanuddin Abdullah said this week, without citing any target.
"The rupiah faces two hurdles in oil prices and falling stock prices," said Lindawati Susanto, head of currency trading at PT Bank Resona Perdania in Jakarta. "Intervention is propping the market up a bit for now."
The rupiah weakened to 9,437 per US dollar in Jakarta, from 9,395 a week ago, data compiled by Bloomberg show. The rupiah declined 0.4 percent for the week.
Indonesia buys one-third of its oil needs from abroad and subsidizes local prices to keep them affordable for consumers, putting pressure on the budget deficit.
Elsewhere, the Singapore dollar gained 0.8 percent this week to S$1.4334 and the Thai baht advanced 0.7 percent to 33.46 in onshore trading. The Vietnamese dong gained 0.1 percent to 16,007 and the South Korean won fell 0.3 percent this week to 938.45.
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