The Indonesian rupiah strengthened past the psychologically important 10,000-per-dollar mark on Wednesday on the back of improving investor confidence after monetary tightening in the past two weeks.
The Taiwan dollar hovered close to its lowest level in at least eight years against the currency of export rival South Korea on expectation the central bank will prevent gains in the currency after a widely expected rate rise on Thursday aimed at stamping out inflation expectations.
Other Asian currencies were little changed as a smaller-than-expected US trade deficit for July supported the US dollar.
The rupiah gained almost 1 percent from late Asian trading on Tuesday and was quoted at a three-week high of 9,980 per dollar in early Asian trades.
It gave up some of those gains by the afternoon and was bid at 10,025 per dollar.
The currency has gained more than 17 percent since hitting a four-year low of 11,750 on August 30 after the central bank moved to calm financial markets by raising its key rate by 125 basis points and requiring banks to park a greater share of deposits as reserve with the central bank in a bid to tighten money supply.
"Foreign investors who sold the rupiah last month are trying to collect it now," said a Jakarta currency dealer.
"It's all about the supporting news," he said referring to the rate rises and a government pledge to raise fuel prices early next month as part of a plan to cut its ballooning fuel subsidies.
Ratings agency Fitch said on Tuesday it expected further aggressive monetary tightening in Indonesia in coming weeks.
The Taiwan dollar weakened to 32.811 per dollar, trading close to last week's 10-month lows after a top central bank official warned on Tuesday that the currency was too strong compared with regional peers and did not reflect the country's deteriorating trade performance.
The currency has already weakened 3.5 percent in the third quarter against the dollar.
IDEAglobal said the verbal intervention by the central bank deputy governor was seen by the local market as an attempt to ward off strength in the currency in the event of a 25 basis point rise in the benchmark interest rate on Thursday.
A Reuters poll of 13 analysts showed seven expected a 12.5 basis points rise in the key discount rate while the others forecast a 25 basis point rise.
IDEAglobal said central bank warnings tilted the balance of expectations to a 25 basis points rise.
The Thai baht traded on Wednesday close to Tuesday's three-month high against the Singapore dollar in the wake of the central bank's higher-than-expected 50 basis points rate increase last week - the seventh rate rise since last August.
IDEAglobal said the trend could reverse as Bank of Thailand intervenes to keep the baht's gains in check to support local exporters. Thai foreign exchange reserves rose more than $500 million in the week ended September 2 indicating central bank purchases.