Most Asian currencies edged down on Friday, touching fresh multi-week lows, as the yen came under pressure after soft consumer price data strengthened a view that any rise in Japanese interest rates would be slow.
Traders also braced for a speech by Federal Reserve Chairman Ben Bernanke later in the day, which could provide fresh clues on US inflation and interest rates.
The Singapore dollar eased to 1.5808 per US dollar, its weakest since August 15 and the South Korean won dipped to its lowest in about 1-1/2 weeks at about 962 per dollar.
The Taiwan dollar fell a fifth of a percent to a 2-1/2 week lows at 32.91 per US dollar. The Thai baht slipped to 37.74 per dollar, its weakest in more than two weeks. Data showing Japan's core consumer price index rose 0.2 percent in July from a year earlier, against expectations of a 0.5 percent rise, was seen by traders as a sign that the next Japan rate increase would come later rather than sooner.
The Bank of Japan lifted its target for the key overnight call rate to 0.25 percent in July, the first rise in six years.
The dollar hit a one-month high at about 117.25 yen "The main drivers for Asian currencies at the moment are what happens with the renminbi (yuan) and what happens with Japanese monetary policy, which is one reason for the pullback in regional currencies today," said Thomas Lam, Treasury economist at United Overseas Bank in Singapore.
"The market was caught off guard by the Japanese CPI data." The Philippine peso bucked the regional trend, firming about 0.4 percent to 51.38 per dollar. One trader said the market was simply covering short peso positions after the currency weakened to a three-week low at 51.60 per US dollar on Thursday.
Another said the currency drew support from data on Friday showing the Philippine trade deficit for the first six months of the year was $1.834 billion, lower than the deficit of $3.194 billion in the same period.
Dealers said there was no sign of central bank intervention on Friday but they suspected the central bank had been in the market on Thursday to support the peso.
"So far today, we haven't seen the central bank, but yesterday they were there buying the peso at 51.50, then at 51.55 and 51.60," said a Manila trader. The Indonesian rupiah was a touch firmer at 9,130 per dollar, up about 0.4 percent from Thursday's one-month lows.
The rupiah may strengthen to break 9,000 per dollar by year-end due partly to expected strong exports and an easing in inflation, central bank deputy governor Aslim Tadjuddin said on Friday.
"This week's USD-IDR rally has apparently been met with BI (Bank Indonesia) US dollar selling for the last three days," ABN Amro senior currency strategist Shahab Jalinoos said in a note. "What's interesting about this is that until the US dollar rally began, BI had in recent weeks been active buying USD around 9,050 ... the impact of this is to supress ranges (both intra-day and intra-week) and reduce volatility."
Malaysia's central bank, meanwhile, is expected to keep its benchmark interest rate at 3.5 percent later on Friday as domestic consumption slows. The central bank has raised the key rate three times since last November to curb inflation.
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