Most Asian currencies hit multi-month lows against the dollar on Thursday as another surge in oil prices added to worries about regional economies and the US currency rose to an 11-month peak against the yen. The South Korean won, which often tracks the yen closely, led the decline, easing 0.8 percent to a six-month low of 1,056.5 per dollar.
Comments from Bank of Korea Governor Park Seung that the recent fall in the won was welcome also undermined the currency.
The Taiwan dollar and Philippine peso fell to their weakest levels in about six months, while the Singapore dollar eased to its lowest level in almost 10 months at 1.7009 per dollar.
The Thai baht shed almost half a percent from levels seen in late Asian trade on Wednesday to hit 41.73 per dollar - its lowest since September last year.
Oil prices hit record highs above $61 a barrel, fanning worries about the economic outlook. Asia imports two-thirds of its crude oil requirements.
"At this stage, the view is that Asia will be hurt first by high oil prices in terms of the growth story. It looks like the US dollar is still the safe haven," said a trader in Singapore.
Analysts said the Thai baht was among the Asian currencies most vulnerable to high oil prices.
Thailand is facing its first serious trade and current account deficits since the 1997/98 Asian financial crisis and the deteriorating outlook has been brought on mainly by costly oil imports.
Against this backdrop, the baht has shed more than 6-1/2 percent against the dollar this year to become Asia's worst performing currency after the yen.
"India and Thailand stand out in terms of exposure in their merchandise balance to an oil shock," said Deutsche Bank currency analyst Mirza Baig.
"India has the capacity to offset the impact with its capital account as portfolio flows are coming in. But Thailand has no such luxury and high oil prices have probably hit the Thai baht worse than the entire region."
The Philippine central bank said late on Thursday it would raise banks' reserve requirements by two percentage points to 21 percent, effective July 15.
Analysts said the news would support the peso when local markets reopened on Friday. Offshore trading in the peso is negligible. The currency has shed almost three percent in the past month amid political turmoil.
The Indonesian rupiah showed no reaction to news that state oil firm Pertamina plans to import large amounts of oil products in September.
Instead, the currency drew support from news earlier this week that Pertamina will be able to get dollars directly from the central bank to finance oil imports.
The rupiah was quoted at around 9,800/9,810 per dollar, down about a quarter of a percent on the day but above Tuesday's three-year low of 9,900.
"Dollar/rupiah is just drifting higher with the rest of dollar/Asia," said one Singapore-based currency trader.
"After they said Pertamina will get its dollars from the government, no one's worried about how much they import."
The trader said the Indonesian central bank had been spotted selling dollars around 9,830 on Thursday. It was reported to have been in the market earlier in the week.
Analysts said further weakness in Asian currencies against the dollar was likely if no news on any change to the yuan came out of this week's meeting of leaders of the Group of Eight countries in Scotland.
It is widely expected that a move by China to loosen the yuan's tight peg to the dollar would boost other Asian currencies.
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