Asian currencies weakened on Wednesday, with the Taiwan dollar hitting a 9-1/2-month low, as oil prices hovered near record highs leaving investors worried about the outlook for Asia's growth and inflation.
The Indonesian rupiah bucked the trend, gaining more than 1 percent compared with late Asian trading on Tuesday ahead of an expected government announcement on measures to restore investor confidence. The currency dropped to a four-year low on Tuesday.
The government twice delayed an announcement. A spokesman said the final touches were being made to the president's scheduled speech.
Elsewhere, the Taiwan dollar fell as much as 0.4 percent to T$32.8 per dollar, its weakest level since last November.
The South Korean won dropped almost half a percent 1,039.3 per dollar and the Singapore dollar weakened to 1.6900 per dollar, six-week lows for both currencies.
The Philippine peso dropped to a seven-week low of 56.3 per dollar.
Analysts said high oil prices this week, coupled with waning confidence towards emerging markets after the rupiah's nosedive, helped overturn earlier optimism about a boost to Asian currencies from a possible rise in China's yuan currency.
Asian currencies had gained last week on speculation China would let the yuan strengthen further ahead of President Hu Jintao's visit to the United States next week.
"With FX trades linked to the yuan and ringgit souring, there is a risk that the market wants to exploit Indonesia's recent mini-crisis to spark contagion worries in Asia," Philip Wee, a DBS Bank currency strategist, said in a report.
He said this week's weakness in Asian currencies reflected the paring of optimism on a yuan appreciation, rather than an increase in the risk premium for holding Asian assets.
New York crude oil futures traded as high as $70.65 per barrel, hovering near Tuesday's record high of $70.85, raising oil import costs across Asia, fuelling inflationary pressures and undermining the region's balance of payments.
The rupiah has been the biggest loser from surging oil prices, having shed more than 9 percent so far this year.
It fell as low as 10,700 per dollar earlier on Tuesday, well above Tuesday's four-year low of 11,750, but rebounded by midday to trade as strong as 10,200, up 2 percent from late Tuesday.
Currency dealers in Jakarta said there was some selling by foreign investors in early trading to repatriate cash from the sale of local stocks and bonds in recent weeks.
Jakarta's key stock index gained 1 percent on Wednesday but is still down 11 percent this month.
The central bank on Tuesday raised the target rate on its benchmark one-month debt by 3/4 of a percentage point to 9.5 percent. It also raised the amount of cash banks were required to park with the central bank, tightening monetary policy, to try to make rupiah assets more attractive to investors.
After a seven-hour cabinet meeting on Tuesday, the cabinet secretary said more measures would be announced on Wednesday to bolster the rupiah.
Financial markets were looking for the authorities to move quickly to cut oil subsidies by raising domestic fuel prices and for the central bank to keep tightening monetary policy.
Bank Indonesia Governor Burhanuddin Abdullah, in Tokyo to sign a currency swap agreement with Japan on Wednesday, said he would not shy from taking action on interest rates if it was necessary
"The market is looking at what the central bank does, not says," said a currency dealer.
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