SINGAPORE - The Philippine peso turned firmer after hitting a near six-week low against the dollar on Thursday on measures by the central bank to slow down the currency's appreciation.
Other emerging Asian currencies also gained on exporters' demand for settlements and the prospect of drastic monetary easing by Japan's new government.
The peso weakened to 41.26 per dollar earlier in the day, the lowest since Nov. 19, after the central bank governor said on Wednesday that it will impose limits on local and foreign banks' forward positions in currencies as a way to manage speculation.
But it turned higher as the measures are unlikely to hurt the bright longer-term outlook, dealers said.
The peso closed 41.125 against the dollar, stronger than its P41.16-to-$1 finish on Wednesday.
The Philippine currency has gained 6.6 percent against the dollar so far this year, becoming the second-best performer among emerging Asian units, on strong inflows to the country's stocks and bonds with forecasts of sustained and robust domestic economic growth.
"Investors reduced their dollar short positions as not to ruin a long weekend because of the new measure and the U.S. fiscal cliff concerns," said a foreign bank dealer in Manila, referring to U.S. spending cuts and tax increases.
"But pretty much fundamentals are still intact. I prefer to wait for the bounce in the dollar and sell it," said the dealer, adding he would build up short positions in the dollar when it rises to 41.50 versus the peso.
Financial markets in Philippines will be closed on Monday.
Weakness in the yen following the election of a new Japanese government helped drive other regional units higher.
The Singapore dollar climbed to the strongest level in more than four years against the yen, while the won reached the highest level since May 2010.