The Malaysian ringgit and Indonesian rupiah led an Asian currency rally on Friday as the dollar faltered due to worries about the US government debt, while the Philippine peso's rise triggered official intervention.

The dollar slid to a five-month low against a basket of major currencies after Standard & Poor's cut its outlook on Britain's triple-A rating, stoking fears that the US government may face the same fate as its debt mounts.

As Asian stocks appeared to be losing steam, the emerging Asian currency rally may soon hit a roadblock amid doubts about the stamina of any global economic recovery.

RINGGIT: The Malaysian ringgit jumped 1 percent to 3.493 per dollar, its highest since early January.

"The ringgit is rising on general dollar weakness," said Kuala Lumpur-based trader.

Offshore dollar/ringgit non-deliverable forwards (NDFs) moved lower but trailed the move in the spot rate.

One-year NDFs fall to 3.5065, implying a 0.4 percent ringgit fall from the spot compared to 0.2 percent on Thursday.

RUPIAH: The high-yielding Indonesian rupiah rose as far as 10,220 per dollar, up almost 1 percent from Wednesday and hitting its highest in seven months.

The market was closed on Thursday for public holiday.

The rupiah gained as deputy central bank governor Hartadi Sarwono the currency was likely to strengthen further on the back of a recovery in the global economy.

The rupiah, the top performing currency in Asia, has gained 7 percent against the dollar so far this year.

But one-year offshore NDFs still priced in a 7 percent rupiah fall from the spot on Friday, little changed from the previous session.

PESO: The peso failed to advance further after hitting a two-week high at 47.03 per dollar, the central bank was suspected of intervening to contain the peso's strength.

Traders suspected the central bank bought dollars near 47.

"The peso is following the dollar's downward move and as such it's appreciating today," said a second trader.

Meanwhile, one-year offshore dollar/peso non-deliverable forwards fell to 48.35, implying 2.7 percent peso depreciation from the spot compared with a 3.2 percent decline suggested on Thursday.

Spreads between one-year NDFs and onshore forwards narrowed slightly with the latter inching up to 48.106.

Copyright Reuters, 2009

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