Most Asian currencies were set for weekly losses on Friday, with the Philippine peso drifting to its lowest level in nearly four weeks and the Indonesian rupiah hovering near a record low, as stalled U.S.-Iran peace talks underpinned the dollar.
Most stock markets in the region were headed for weekly gains after U.S. President Donald Trump extended the ceasefire with Iran indefinitely, though stalled talks and the fragility of the truce kept investor optimism in check.
The MSCI gauge of EM Asia stocks inched higher and was on course for a third consecutive weekly rise. An MSCI gauge of global EM currencies inched lower and was anchored near its lowest since April 13.
The Philippine peso weakened 0.5% to 60.755 per dollar, its lowest since late March. The currency has lost nearly 2% so far this week, its worst performance in seven weeks. The Philippine central bank raised its policy rate to 4.50% on Thursday to tame inflation.
On Friday, the central bank said it was prepared to do "whatever was necessary" to contain inflation, leaving the door open to more interest rate hikes. In Indonesia, the rupiah firmed slightly before paring gains, trading around 17,290 per dollar, not far from the record low of 17,320 touched on Thursday.
The rupiah has fallen around 0.6% this week, heading for its third consecutive week of losses and its worst since March 6.
"I think currencies among the most heavily oil import-dependent economies should continue to remain vulnerable - the likes of INR, IDR, PHP and THB, as we saw in the early days of the Iran conflict," Galvin Chia, Asia EM strategist at Societe Generale, said.
"Among these, the first three twin deficit economies should screen relatively more vulnerable."
Elsewhere, the Malaysian ringgit shed 0.3% to its lowest since April 13 and on course for its worst week since March 23.
The Thai baht slipped to 32.555 per dollar, its lowest since April 7, and was on track for the steepest weekly fall since March 16.
Among equities, Jakarta led declines, falling 3.5% to hit the lowest since April 8. The index has shed more than 5.5% this week, and is on track for its worst showing since early March.
Stocks in Kuala Lumpur were largely unchanged on Friday but have risen by more than 1.5% so far this week. The index was on course for its best week since January 12.
The KOSPI index traded flat but was on track for its third consecutive week of gains, riding on momentum in artificial intelligence.
Taiwan equities surged over 3% to notch a fresh record high of 38,989.94 points.
HIGHLIGHTS:
** Fitch says no immediate downgrade if Indonesia's deficit tops 3% due to the Iran war impact
** Israel, Lebanon extend ceasefire as Trump seeks 'best deal' with Iran
** Japan's core inflation stays below BOJ target, energy risks grow - Reuters
