Asian currencies were steady to a touch softer on Monday, undermined by the yen, which hit a record low against the euro on expectations that Japan would raise interest rates only slowly.
Trade was generally subdued and dealers said a summer trading lull in major financial markets had spilled over to emerging markets, keeping currencies in a tight range.
The Taiwan dollar fell a fifth of a percent to about 32.96 to the US dollar, its lowest in five weeks, while the South Korean won eased 0.4 percent to a two-week trough at 965.50 to the US dollar.
The Singapore dollar dipped at one stage to 1.5812 per US dollar, its weakest in about two weeks, but had recovered its falls by late trade. "Since Friday there have been local offers above the 1.58 handle, so that has capped dollar gains," said a trader in Singapore. "The market is really not going anywhere."
The Thai baht was stuck in a narrow 37.74-37.65 range, while the Philippine peso was slightly firmer at 51.25 per US dollar and the Indonesian rupiah was steady around the 9,125 per dollar level.
Analysts said a general scaling-back of short positions on the US currency weighed on the regionals. "We have this divergence where on the one hand the dollar seems to be getting stronger, but on the other the data seems to be getting weaker," said Standard Chartered's head of currency strategy, Callum Henderson.
"Positioning has to be a big part of that. The market is starting to cut back its short dollar positions and that is spilling over into Asia."
International Money Market currency speculators trimmed their long euro and sterling positions in the week to August 22, with net long euro positions falling to 81,470 from 90,204 contracts a week earlier, data on Friday showed.
The Malaysian ringgit was barely changed at 3.6790 per dollar, showing little reaction to a decision late on Friday by the Malaysian central bank to leave interest rates unchanged, as expected.
There was some focus on Indonesia's plans to sell remaining shares in two major banks in the middle of September and the impact that might have on the rupiah.
Indonesia's state asset firm said on Friday it planned to sell its 5.5 percent stake in the country's sixth-largest lender, PT Bank International Indonesia, and a 26.2 percent stake in the seventh-largest lender, PT Bank Permata.
"So far this hasn't had much impact and we need to see more details," said a trader in Jakarta. Some analysts said it could be positive for the rupiah. "A lot of foreign money that has come into Indonesia is actually not bond money as everyone thinks," said Shahab Jalinoos, a senior currency strategist at ABN Amro. "A lot of it is equity money and that tends to be stickier, so less 'hot', and that is always a positive."
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