The Korean won fell on Friday, hurt by the central bank's unexpected rate cut the previous day and the yen's decline following soft Japanese growth data.
Emerging Asia's biggest losers for the day - the won and the Singapore dollar - were dragged down by a one percent fall in the yen after Japanese GDP rose a lower-than-expected 0.4 percent in the April-June quarter from the previous three months.
South Korean markets were also still pondering over Thursday's 25 basis point cut in overnight rates, and the Bank of Korea's concerns about the economy and high oil prices.
The won fell to 1,162 per dollar from 1,157. The currency slid to one-week lows on Thursday.
Korean equities were up again, but analysts at DBS expressed their concerns about the market's vulnerability to higher oil prices, sluggish domestic demand and the downturn in technology stocks world-wide.
Despite the Korean authorities' assertion they would not intentionally weaken the won to boost exports, DBS said the won may not appreciate much against the yen.
"As for the won, the end of the "decoupling policy" does not necessarily imply that won would re-establish its 1:10 relationship with yen, as seen from second-quarter 2002 into third-quarter 2003," DBS said.
"Instead, a new relationship may have formed since second quarter 2004, in which dollar/won is trading a 1,140-1,190 band with a 104-114 dollar/yen range," DBS said.
Most economists reckon the won will be range-bound against the dollar in this policy environment, with at the most some modest depreciation to about 1,180 a dollar by the year-end.
Bank of America said in a note they were bearish on the won since policy in Korea was clearly focused on growth, noting that the won had weakened 0.4 percent in trade-weighted terms from levels before the rate cut.
Elsewhere, the Taiwan dollar fell to a two-week low of 34.21 per dollar and the Singapore dollar found some support at a one-week low of 1.7220.
The Thai baht and the Indian rupee fell slightly but were supported by the fear their central banks would intervene to defend these currencies.
The rupee fell to one-year lows around 46.50 in late July, but has since recovered. It ended at 46.20 on Thursday, helped by inflows of subscriptions to an initial public offering by Tata Consultancy Services. TCS raised 54.2 billion rupees in Asia's second-biggest tech IPO this year.
The Indonesian rupiah weakened again to 9,285/9,295 per dollar, levels it held before the first round of presidential elections on July 5.
Those elections are headed for a second round in September after failing to produce a majority for any single candidate.
Strategists at UBS said the reduced chances of aggressive tightening in the United States and the rupiah's status as a high-yielder ought to have boosted the currency, but had not.
"The risks are tilted to even greater rupiah out-performance should the election run smoothly as expected. Investors are still holding back for fear of possible election related violence.