Earlier this week, the US dollar touched a one-year high but slipped as the week progressed on improving optimism around a global recovery.
"With the Fed tapering expectations well-telegraphed and a Fed rate hike not likely to occur until second-half of 2022, we see some room for stretched U.S. dollar longs to unwind in the near-term," analysts at Maybank said in a note.
Over the week, South Korea's won appreciated 1%, the Thai baht firmed nearly 2% and was on track for its best week since late-August, while Indonesia's rupiah jumped nearly 1% and headed for its best week since early September.
The Singapore dollar and the Malaysian ringgit were also on track to post weekly gains.
On the other hand, India's rupee and the Philippine peso were headed for weekly losses.
Regional equities were set to post strong weekly gains as the easing of curbs in countries such as Indonesia, Thailand, Malaysia and the Philippines boosted sentiment.
Shares in the Philippines advanced more than 4% over the week, while Singaporean equities, Thai stocks , India's Nifty 50 and Malaysian shares were set for a more than 2% gain for the week.
On Friday, most Asian currencies strengthened, with South Korea's won appreciating about 0.5%, and the Indonesian rupiah scaling a near eight-month high supported by the recent surge in energy prices.
"Elevated Brent, crude palm oil, natural gas prices remain supportive of commodity-linked FX, and Asian equities are largely seeing green," analysts at Maybank said.
Indonesia, South-East Asia's biggest economy and a major exporter of commodities including thermal coal, is benefiting from a global energy crunch that is pushing coal prices to record levels due to high demand and supply disruptions.
The rupiah is among the best performing currencies in the region, with only a marginal drop so far this year. Investors are now awaiting Bank of Indonesia's policy meeting next week where the central bank is expected to hold interest rates steady to boost economic recovery, a Reuters poll showed.
Markets in India were closed on Friday for a holiday. - Reuters