Suspected heavy intervention by South Korean authorities for the second straight day pushed the won down to a six-week low on Friday, leading most Asian currencies lower against a broadly stronger dollar.
Currency dealers said they believed South Korean authorities had bought about $1 billion, a day after they were suspected to have bought a similar amount to cap the won's rise.
The won fell as far as 935.1 per dollar, down nearly 0.8 percent from late Asia trade on Thursday. The fall has wiped out the currency's gains versus the dollar so far this year, making it the worst performing currency in Asia after the Japanese yen and the Taiwan dollar.
But Korean officials, concerned a stronger currency would hurt exporters, point to the won's cumulative gains of nearly 30 percent over the past three years. The Philippine peso was one of the few gainers in the region.
Extending this week's sharp gains on the back of strong capital inflows after relatively smooth passage of Monday's elections, the peso gained another quarter of a percent against the dollar and hit another six-year high at 46.6 per dollar. "I think dollar/Asia will remain mixed with some currencies doing very well, like the peso, rupee and rupiah, but some other currencies suffering, particularly the Taiwan dollar," said Richard Yetsenga, currency strategist at HSBC.
Shahab Jalinoos, currency strategist at ABN Amro, said in a research note he believed the won would also underperform several of its regional peers. The dollar hovered near a three-month high against the yen after data showed a strong rise in regional US business activity, backing a view that US Federal Reserve will be in no hurry to cut interest rates.
The market was generally cautious ahead of a meeting of Group of Eight finance ministers in Germany starting later on Friday, but few traders expect the gathering to rattle currency markets.
The Singapore dollar steadied near 1.5270 per US dollar after dipping as low as 1.5286, its weakest level in about two months as investors sold the currency amid falling domestic money market interest rates after Thursday's weaker-than-expected export data. "Local rates have come off pretty sharply, so there is a big scaling back of long Singapore dollar positions on the crosses," a trader says.
Singapore's non-oil exports fell 7.2 percent after seasonal adjustments, dragged down by non-electronics goods. Sean Callow, currency strategist at Westpac Bank, said he expected the Singapore dollar to weaken towards 1.5375/1.5400 in the next two to three weeks.
The Indonesian rupiah stabilised around 8,820 per dollar after dipping as low as 8,835 as investors bought dollars to cover short positions exposed by last week's rupiah gains. "The market is following the dollar strength, so we see quite a bit of dollar buying related to short-covering ahead of the weekend," said a trader in Jakarta.
"But we expect fresh dollar selling in the range of 8,850-8,870," she added. The Chinese yuan hit a post-revaluation high of 7.6688 per dollar as dealers expect the currency to appreciate faster in the short term as senior Chinese and US officials are set to meet next week to discuss economic and trade issues.