The Singapore and Taiwan currencies weakened a fifth of a percent on Tuesday as the dollar was boosted by renewed expectations the US Fed would raise rates at its September 20 meeting, despite Hurricane Katrina.
The Taiwan dollar was also weighed down after a newspaper cited central bank Deputy Governor Liang Fa-chin saying that the currency had firmed too much compared with other Asian units, considering the island's trade had under-performed its Asian peers in the first seven months of this year.
The Indonesian rupiah was an exception, gaining more than half a percent to a new three-week high of 10,070 per dollar after oil futures slipped overnight to a four-week low, easing the pressure on Indonesia's import costs and fuel subsidies.
Federal Reserve Bank of Dallas President Richard Fisher said in a speech on Monday that Katrina would not cause any lasting damage to the US economy and that it was too early to judge the impact on monetary policy.
The comments came ahead of a raft of data due this week that is expected to provide the first indicatations of Katrina's impact on the US economy and reignited expectations the Fed would raise rates this month for the 11th consecutive time.
"Everybody's reviewing how the hurricane impacted the economy and people are saying let's look at the data again," said Thomas Lam, treasury economist at United Overseas Bank in Singapore.
The releases of the New York and Philadelphia Fed surveys and University of Michigan consumer sentiment index are due later this week.
"On balance, we think, the data is going to be negative dollar biased because of the hurricane," Lam said.
Some analysts were cautious about the dollar ahead of US July trade data due later on Tuesday, which many expect to show a widening deficit.
"The immediate market focus will be directed to the US trade balance release today," said Claudio Piron, currency strategist at J.P. Morgan Chase Bank in Singapore.
"We expect the oil price run-up to drive a further widening of the US trade shortfall to $60 billion in July." The dollar's gains in the past week, as downside risks for the US economy resulting from Katrina were pared back, have hurt the Singapore dollar more than other Asian currencies.
Lam estimated the Singapore dollar was trading at 0.9 percent below the midpoint of the Monetary Authority of Singapore's preferred but undisclosed policy trading band.
But the volatility in the currency should rise this week because of the mixed signals about the health of the US economy and implications of higher energy prices, Lam said.
The Indonesian rupiah gained for the third-straight session as a decline in oil prices and increases in central bank benchmark rates over the past two weeks helped to restore some confidence in the country's financial markets.
Government officials also indicated on Monday that they're planning to raise fuel prices in early October.