The Indonesian rupiah and Malaysian ringgit led other Asian currencies lower on Monday, as worries about accelerating inflation and high US interest rates led to growing risk aversion among global investors.
The Indonesian rupiah fell to a low of 9,370 per dollar, compared with 9,225 in late Asian trading on Friday, closing in on last week's 3-1/2-month low of 9,420.
The ringgit fell more than half a percent to a three-week low of 3.6450 ahead of a central bank policy review.
The Singapore dollar fell as low as 1.5970 per dollar, its weakest level in almost four weeks, partly because of the weaker ringgit.
Emerging Asian currencies, led by the rupiah, took a pounding last week after US inflation data surprised investors and led to increased expectations that the Federal Reserve will raise interest rates again in June, extending a two-year-long cycle.
Traders said those worries spilled into this week and were likely to keep emerging market currencies volatile, given the low liquidity in some of them such as the rupiah.
"The dollar/rupiah is going higher because of offshore investors," said a Jakarta-based currency dealer.
"People are selling central bank paper here and buying dollars," he said, referring to the sell-off of 1-month and 3-month central bank certificates which foreign investors had bought earlier this year to snare some of the highest yields in Asia.
The dealer said many local exporters and investors were seen selling dollars after it strengthened past 9,300 rupiah. That helped put a floor under the rupiah's decline.
At the same time growing demand, from oil importers has boosted local demand for dollars. Local oil companies such as Pertamina and other importers were seen buying dollars at 9,200 per dollar, the dealer said.
Traders said many banks suffered losses from last week's sell-off in emerging market currencies because most had sold the US dollar through April on an expectation the Fed would put a brake on its rate rising campaign.
But several Fed officials warned last week that inflationary pressures remained their primary concern, leading some banks such as Bear Stearns to predict at least two more Fed rate increases in coming months.
"People are looking at US interest rates, inflation and becoming more cautious. They get more cautious after suffering losses."
Higher rate expectations also led to a sell-off in emerging market stocks with indexes in most Asian markets down on Monday.
Foreign investors have been net sellers of shares in South Korea for the past eight sessions. In Taiwan, they have been net sellers for the past six sessions, while trade on India's stock market was temporarily halted on Monday after the benchmark index fell more than 10 percent.
The Taiwan dollar fell to a three-week low of 32.19 per dollar. The Philippine peso fell to a four-month low of 52.86 per dollar. The Indian rupee fell to a five-month low of 45.80.
Many analysts say the peso and the Indian rupee are among the most vulnerable currencies in Asia because of high trade deficits and relatively low real interest rates in their countries.
The peso has lost 2.9 percent and the Indian rupee has lost 1.8 percent in the last two weeks.