The South Korean won, which resumed trading after a two-day Lunar New Year holiday, rose nearly 1 percent, leading the regional currencies' gains on the day. "In terms of the Asia FX movements, the most of what we are seeing is the reflection of what happened on the US close on Friday," said Khoon Goh, head of Asia research at ANZ Banking Group (Singapore).
"However with most markets closed, we can't read much into the price action today." The S&P 500 index rose on Friday to mark its biggest weekly increase in five years. Currency markets in China and Taiwan were closed for Lunar New Year and India is shut for a banking holiday. The Philippine peso hit its lowest level in more than 11 years, weighed down by the central bank's decision to cut banks' reserve requirement ratios.
The Bangko Sentral ng Pilipinas reduced banks' 20 percent reserve ratio requirement by 1 percent, a move that is expected to pump more than $1.5 billion into the economy. "A cut at this time of rising inflationary pressures may stoke investor concerns of even higher levels of inflation, which is why the peso sold off this morning," the Bank of Tokyo-Mitsubishi UFJ said in a report. The Thai baht also dropped more than a quarter percent as Thailand's economy grew slightly less than expected in the fourth quarter.
The Japanese yen, Singapore dollar, Indonesian rupiah and the Malaysian ringgit all traded flat on the day. The dollar found some traction after sharp declines in the past week due to concerns over widening US trade and budget deficits and speculation that Washington might pursue a weak dollar strategy. The dollar index against a group of six major peers was steady at 89.045.
"Broader term perspective, we maintain our view that broad dollar down-trend is likely to remain in place," Maybank said in a report. "We see opportunities for relative value plays in Asia, favouring currencies that benefit from the export-led recovery and commodity price rebound."