The Indonesian rupiah extended post-election gains on Tuesday after Fitch Ratings raised its outlook on the country's ratings, citing reduced political uncertainty after presidential polls.
Other Asian currencies steadied after a Group of Seven meeting on Friday passed without wealthy nations putting renewed pressure on the region to tolerate foreign exchange gains.
Regional currencies were mostly flat to slightly stronger, reflecting the trend in their stock markets, even as the yen softened ahead of comments from US Federal Reserve Chairman Alan Greenspan later in the day.
"The decline in euro/yen, the rise in the Nikkei and the rise in US stocks all point to a return of risk appetite," said Jimmy Koh, head of research at United Overseas Bank.
Japan's Nikkei average rose for the fourth day on Tuesday.
Koh said the rising Nikkei and the dollar's ascent meant dollar/yen would stay in tight ranges, keeping Asian currencies range-bound.
"Dollar-regionals are going to be in familiar ranges, with some short-covering of dollars post-G7," Koh said.
The rupiah extended its rally, hitting 9,040 in early deals, its highest level since just days after the September 20 presidential election. In late Asian trade on Monday it was trading at 9,090.
Indonesia's election commission confirmed on Monday that ex-general Susilo Bambang Yudhoyono had won the election with over 60 percent of the vote, defeating incumbent Megawati Sukarnoputri.
On Tuesday, Fitch ratings raised its outlook on Indonesia's sovereign ratings to "positive" from "stable", citing the reduction in political uncertainty after the long election process.
UBS currency strategist Bhanu Baweja said other rating agencies could follow.
"We concede that there is some room for the rupiah to appreciate towards 8,800 against the dollar in the short term," Baweja said in a note.
"But we are of the view that SBY is taking office in a very challenging economic environment for the country, and that he will have to prove he has parliamentary backing for well thought out policies before investment does make a comeback," he said.
The Singapore dollar was a touch weaker on Tuesday at around 1.6860/70, having eased nearly a cent on Monday after hitting five-month highs against the dollar on Friday.
The Monetary Authority of Singapore releases a review of policy next Monday. MAS policy focuses on the trade-weighted value of the Singapore dollar, and at its last review in April it said it would permit a modest and gradual appreciation of the currency.
Markets in Korea were focused on whether the central bank would cut interest rates later this week to follow a 25-basis point cut in August after data showed September inflation was lower than expected.
The won was slightly stronger, helped by equity investor flows, trading at around 1,148 to the dollar. The Taiwan dollar ended weaker on Tuesday, after losing ground on overseas non-delivery forward (NDF) markets as foreign equity fund managers sought to hedge currency risk on their investments.
The Taiwan currency softened by T$0.042 to T$33.918 from Monday's close of T$33.876, hit by routine demand for US dollars from importers at the beginning of the month. Volume contracted to US $472 million from Monday's US $530 million.
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