The rise in global oil prices to a fresh record high weighed on Asian currencies on Wednesday, forcing the Korean won to one-week lows and the Indonesian rupiah to cede some of its election-related gains.
US crude oil prices bolted to a new record of $51.31 a barrel on Wednesday afternoon, causing the Japanese yen to fall back to the weaker side of 111 to the dollar.
The Korean won fell to 1,152 a dollar from Tuesday's 1,147, paring some of the 10 won gains it made in the past week.
The rupiah fell nearly half a percent to 9,110 a dollar but recovered somewhat in later deals.
The Sing dollar fell to 1.6900 a dollar, shedding a quarter percent.
A higher oil price "is unambiguously negative for Asia," said David Simmonds, markets strategist with the Royal Bank of Scotland.
Barring Malaysia, most Asian countries are heavy importers of oil. Japan imports all its crude and South Korea's oil deliveries make up nearly 14 percent of its import bill.
Oil is also a major component of the import bill for Thailand, the Philippines, Taiwan, China and India.
"We've got some offsetting factors. We've got still strong equity markets globally and regionally and foreign money has been going back into many of the region's markets," Simmonds said.
"And, Korea aside, some of these central banks are quite sanguine about the fact that the tightening cycle has started and that helps currencies a little," he said.
"Against that, we have oil prices at $51 and lead indicators for exports pointing downwards," Simmonds said.
Some of the indicators economists use to forecast the trends for Asian exports have been slowing.
Singapore's manufacturing sector slowed in August from July, the imports component in the US Institute of Supply Management index for manufacturing activity has also been declining. The widely watched Philadelphia semiconductor index has recovered this month, but after a steep drop since June.
Trading was also influenced by expectations ahead of monetary policy meetings in Korea on Thursday and Singapore on Monday. Korean markets expect rates to be cut for the second time in three months to stimulate depressed consumer demand and compensate for slowing exports.
In Singapore, analysts expect the Monetary Authority of Singapore to maintain a tightening bias announced in April, through a gradual and modest appreciation of the currency.
The MAS conducts monetary policy by steering the local currency within a band measured against an undisclosed basket of currencies of major trading partners.
"Through the month of September, the Sing dollar gained 1.2 percent against its trade weighted basket, but even now stands just under the level at which the MAS announced it was moving to a tightening bias on April 12, 2004," UBS said in a note.
"We expect MAS will keep policy bias unchanged at 'modest tightening', and continue to suggest being long the Sing against its trade weighted basket."
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