Most Asian currencies were driven lower by a global sell-off in equities with the dollar also surprisingly losing ground, while safe-havens like the Japanese yen and US debt received support. US Treasury yields cooled overnight after Wall Street suffered its worst drubbing in eight months as investors sought safer bets, sucking funds out of emerging markets.
Rising US yields have put pressure on China's yuan as the protracted trade tussle between Beijing and Washington show no signs of easing, with the yuan weakening 0.1 percent to 6.932 a dollar on the day.
The US dollar, often seen as a safe bet in times of uncertainty, lost ground as investors awaited US inflation figures that are expected to show prices rising at a slower pace, potentially softening the Fed's hawkish stance.
Currencies of export-focused economies such as South Korea's won and Taiwanese dollar fell the most against the greenback, down 0.9 percent and 0.5 percent, respectively. Taiwan's stock market fell about 6 percent, while its South Korean counterpart's benchmark index was 3.4 percent lower.
The sinking rupee hit yet another record low in early trade, but steadied to 74.390 by late morning. The bearishness toward the rupee mirrored sentiment on the broader NSE share index, which slumped as much as 3 percent to its lowest since April this year.
Even oil prices falling to two-week lows failed to provide support for the rupee, with expectations growing that Asia's worst performing currency may touch 75 to the dollar. Traders said intermittent dollar selling by the central bank had prevented a sharper fall in the rupee.
As losses mounted across the currency space, the city-state's dollar strengthened 0.1 percent to 1.382, ahead of a key policy meeting on Friday while also gaining support from a weaker greenback.
A small majority of analysts in Reuters poll released on September 28 expect the Monetary Authority of Singapore (MAS) to tighten policy, as trade war worries weigh. Mizuho bank, in a note, said "the knee-jerk SGD bump up from MAS tightening may be short-lived and shallow, quickly fizzling."
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