The Philippine peso and the Indian rupee rose on Thursday, as dealers bought back the currencies near recent lows on speculation the worst of an inflation-driven sell-off in the assets of those countries was nearly over. Uncertainty remained, though, about whether commodity prices will resume an uptrend and further complicate the job of policymakers, trying to lessen the blow of climbing food and fuel prices.
The price of oil is one of the key factors for the direction of emerging Asian currencies. If crude climbs back above $90 a barrel, then the rebound in currencies like the rupee could stall, Kumar said. US crude futures hit $92.58 a barrel on January 3, the highest in more than two years, but have since eased and traded at $87.19 on Thursday.
Late in the session, the dolalr rose 1 percent against the yen following a downgrade of Japan's government debt rating by Standard and Poor's. The gained 0.4 percent against the dollar as dealers covered short positions after dollar/peso broke below a support level.
The dollar/peso fell to 44.150 from previous close of 44.445. The level 44.30 is a pivot point having served as a good resistance to the dollar's rise earlier. A break below this level neutralises the immediate bullish outlook for the dollar. Philippine stocks rose 1.50 percent. The won rose for a fourth consecutive session as foreign investors kept buying local stocks and exporters continued to be on the bid.
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