Indonesia's rupiah weakened half a percent on Thursday as the country gradually begins to rollback its pandemic-era stimulus citing signs of an economic recovery, while the Thai baht extended gains into a third straight day to hover near a five-month high.
The Philippine peso firmed slightly even as the country's central bank kept its interest rates unchanged, and the Taiwan dollar and the South Korean won appreciated between 0.1% and 0.2%.
The Indonesian rupiah eased 0.5%, marking its worst session since early November as strong growth projections for 2023 of between 5.3% and 5.9% - above this year's 5.2% growth target - underscored the government's tapering plans.
Analysts at Barclays see "a relatively challenging environment in the short term" for the rupiah due to US Federal Reserve normalisation triggers, with Indonesian bonds, one of the highest-yielding in the region, seen rising further.
Indonesian rupiah firms amid thin holiday-hit Asian currencies
Indonesia's 10-year benchmark yield stands at 6.508%, up 13.2 basis points since the start of this year.
The Fed on Tuesday remarked that while it will begin raising interest rates to combat inflation it will decide the pace of hiking at each meeting, driving investors to riskier assets.
Back in Asia, the Philippine peso appreciated 0.1%even as the central bank maintained record-low interest rates for a 10th consecutive policy meeting, saying expectations of manageable inflation allows it to retain policy support.
The Thai baht, the best performing regional currency this year after a dismal performance in 2021, rose for a third consecutive session, up about 0.4%, to linger near its highest levels since early September.
Among equities, the South Korean benchmark jumped up to 1.5% to hit its highest in a week, shares in Singapore rose for a third day running, up about 0.5% as the island-nation reported fourth quarter GDP higher than the government's advance estimate and maintained its growth forecast for 2022.
"While official 5.5% forecast for 2022 still implies lower full-year growth in 2022, the forecast represents a solid economic recovery, as the strength of 2021 GDP growth was exaggerated by the outsized base effects arising from the initial impact of the pandemic in 2020," Barclays analysts said.
Other equity markets including the Malaysian benchmark, Thailand and Chinese equities rose in the range of 0.1% and 0.9%.
Indonesian shares fell as much as 0.9%, and stocks in Manila were down about 0.2%.
Highlights:
** Indian shares flat as Ukraine tensions offset Fed gains
** Indonesia 10-year bond yields inch up to 6.517%
** Philippines in talks with banks on structure of maiden green bond issue