Most emerging Asian currencies rallied on Monday with India's rupee at a near one-month high as Lawrence Summers quit the race to be Federal Reserve chief, sparking hopes that the U.S. central bank may keep monetary policy loose for longer.
But the Taiwan dollar and the South Korean won pared some initial gains as their foreign exchange authorities were spotted buying U.S. dollars to stem their appreciation, traders said.
In addition, Taiwan's central bank asked some brokerages to withdraw dollar offers before noon in order to curb the rise of its currency, according to several traders. The island's authorities have been frequently spotted intervening in the currency market to reduce volatilities, according to local traders.
Summers, a former U.S. treasury secretary, was widely seen as relatively more hawkish and his withdrawal could leave Janet Yellen, a well-known policy dove, as front-runner to head the Fed.
News of Summers' decision sparked rallies in Asian stocks, bonds and currencies.
The rupee jumped to as high as 62.45 per dollar, its strongest since Aug. 19, although it pared some of gains after August headline inflation rose at a faster-than-expected pace of 6.1 percent.
The Singapore dollar hit a five-week high on short-covering, while the Thai baht advanced with local stocks and bonds rising.
The Philippine peso ended at 43.61 per dollar, its strongest since Aug. 12 on demand from offshore funds and as remittances in July rose 6.6 percent from a year earlier. Manila stocks rose 2.8 percent. Investors barely reacted to an escalating conflict in the southern Philippines with rogue Muslim rebels.