Asian currencies renewed their move lower on Wednesday as the yen slipped back towards three-month lows against the dollar ahead of a testimony by the US Federal Reserve chairman later in the day.
A rebound in oil prices towards $74 a barrel, as buying stepped up in anticipation of a drop in US crude and gasoline supplies also weighed on Asian currencies, which had opened steady. The yen shed more than half a percent to trade within sight of Tuesday's three-month lows versus the dollar.
But the Indian rupee was the hardest hit Asian currency, shedding about 0.7 percent to about 47 per dollar - its lowest level in more than three years.
The Taiwan dollar fell to its weakest in nearly seven months at about 32.97 per US dollar, while the Malaysian ringgit eased 0.4 percent to its lowest in almost four months at 3.6960 to the dollar.
Dealers said the dollar was still well-supported by investor worries over the Israeli/Hizbollah conflict and ahead of a Congressional testimony by US Federal Reserve Chairman Ben Bernanke, which markets will monitor closely for clues on the outlook for interest rates. The US June consumer price index is due to be released later on Wednesday and is also in focus.
"Bernanke's speech will be fairly key, but the Fed may not provide too much guidance because it is walking a tight rope between slowing growth and higher inflation," said Thio Chin Loo, a senior currency strategist at BNP Paribas.
"The CPI data released before hand will be fairly important as well."
Most Asian stock markets edged higher on Wednesday, lending some support to regional currencies. The Straits Times Index was up more than half a percent and Japan's Nikkei average rose for the first time in six sessions.
"The stock market recovery has helped stabilise the market somewhat although people are still nervous about the global security situation and high oil prices," said Simon Flint, a currency strategist at Merrill Lynch.
Flint said that there was some unease in Manila, where security forces raised an alert level over an alleged plot by rogue troops and communist rebels to topple President Gloria Macapagal Arroyo.
Arroyo will deliver a state of the nation address on Monday. Local markets in Thailand, meanwhile, showed little reaction to news on Wednesday that the country's central bank had left its key interest rate unchanged at 5.0 percent, as expected.
The Thai baht eased to 38.24 per dollar, down about a third of a percent from levels traded late on Tuesday.
"Markets had priced in a no-change move so we are following sentiment towards the dollar, which is bid up against the yen and euro," said a Bangkok trader. "Tonight is the Bernanke statement, so everybody is watching that."