On Saturday, the Bangko Sentral ng Pilipinas said it had toughened the rules on its short-term special deposit instrument that has attracted 1.7 trillion pesos ($40.66 billion) in funds.
Philippine authorities have expressed concern that foreign funds may have been taking advantage of the higher rates being offered by the special deposit account (SDA) facility, introduced by the central bank in 1998 to help manage liquidity in the financial system.
The peso fell 0.5 percent against the dollar in Monday's morning domestic trade with interbank players selling the Philippine currency, but its depreciation was less than that of the Indian rupee and the Indonesian rupiah.
The peso also found technical support around 41.90-42.10 per dollar, the previous lows and former solid resistance. Some interbank names bought the peso on dips, especially around 42.00, while offshore funds showed little interest in selling the unit, dealers in Manila and Singapore said.
Manila's measures "may have some impact on inflows to Philippines, given that SDA pays above treasury bills," said Enrico Tanuwidjaja, a currency strategist at Maybank in Singapore.
"But people are still positive on the peso compared to other regional FX and they may look into other ways to get more peso exposure," he said. "If equity does not see a major sell-off because of the global easing signs, we remain positive on the peso compared to the rest."
Manila stocks dropped 1.7 percent, while MSCI's broadest index of Asia-Pacific shares outside Japan was down 1.6 percent.
Tanuwidjaja recommended investors buy the peso against the ringgit, the rupiah and the Thai baht.
Other analysts and dealers shared his positive view on the peso.
The rosy outlook came as the Manila's Budget chief said the country set an infrastructure budget of 400 billion pesos for 2013, the highest ever, which will boost the economy.
"In the longer term, we see the peso as a darling right now. In risk-off mode, it does not swing. But in risk-on mode, it is reactive," said a European bank dealer in Singapore, who predicted it "will continue to be an outperformer this year."
The peso, helped by inflows, has been the best performer among emerging Asian currencies this year, gaining 4.4 percent against the dollar.
On Monday, regional units reacted to data on Friday showing US employers added only 80,000 new jobs in June, below 90,000 forecast.
China's consumer and producer prices also eased more than expected in June, signaling falling demand for goods from the world's second-biggest economy.
Investors are keeping an eye on a meeting of euro zone financial ministers later on the day, which will focus on follow-up steps to European leaders' plan to shore up indebted states and banks, but the latest talks may only highlight the initial deal's limitations.
Market players are also awaiting the minutes of the Fed's June meeting, which will be released on Wednesday, and China's second-quarter growth data on Friday.
"Outlook for the week seems negative given uncertainties regarding EU finance ministers meetings, FOMC minutes, and Chinese GDP data," said Dariusz Kowalczyk, senior economist and strategist for Credit Agricole CIB in Hong Kong.
"It seems that global slowdown is continuing and high financial risks are still there, and that markets will need to see evidence of both improving before staging a sustainable recovery."
RUPIAH
Dollar/rupiah rose in subdued trading as local players and Japanese banks bought it, dealers said.
State-run banks offered the pair on rallies, limiting its upside, dealers said.
But investors were looking to buy dollar/rupiah on dips, given global risk aversion, they added.
"Sentiment still stayed on bearish risks," said a Jakarta-based dealer, adding investors placed dollar bids on downside.
RINGGIT
Dollar/ringgit gained on deepened worries about global growth.
A senior dealer for a Malaysian bank said it looked better to buy the pair around 3.17-3.18, given global risk aversion and despite caution over possible dollar-selling intervention by the central bank.
Technically, the dollar/ringgit has room to rise further, probably to a resistance line at 3.2000, a daily double top.
"I see troubles ahead of the EU group meeting," the dealer said, referring to the meeting among euro zone's finance ministers.
"The BNM (Bank Negara Malaysia) may step in, but it will watch other central banks and will not reverse a trend," the dealer added.
WON
Dollar/won started the local trade at a session high of 1,145.0 but gave up some of the initial gains to end at 1,141.4 as local interbank players cleared long positions.
Offshore funds bought the pair, while South Korean exporters were reluctant to sell it, dealers said.
"There is few reason not to expect higher dollar/won, but I don't think it would rise above 1,144," said a foreign bank dealer in Seoul.