The People's Bank of China's (PBOC) move on Sunday to slash banks' reserve requirement ratio (RRR) by 110 basis points sent the yuan to a 7-week low of 6.9069 against the dollar in early trade on Monday after a week-long holiday.

The yuan declined 0.1 against the central bank's daily fix of 6.8957 at open, and then weakened further.

Investor anxiety over the escalating Sino-US trade war also sent China shares tumbling.

While the PBOC said the latest RRR cut would not add to the renewed pressure on the yuan, OCBC Bank said in a note it expected the Chinese currency to face "mounting pressure".

That pressure was seen arising from possible interest rate differentials as US yields rise while Chinese long-term yields fall because of the RRR cut.

"We think China may rely more on administrative measures to keep RMB exchange rate in check," OCBC added in the note.

The rising dollar also pressured regional currencies, although the dollar's movements were limited by low liquidity thanks to a holiday in Japan and the US bond market closed for Columbus Day.

Hawkish comments from the Fed and strong data pushed US yields sharply higher last week, with 10-year yields at a seven-year high of 3.248 percent.

The currencies of export-oriented economies such as Taiwan and South Korea, which often track their respective stock markets, declined about 0.2 percent each.

Korea's Kospi benchmark index was 0.4 percent lower, while its Taiwanese counterpart was close to a percent lower.

The Indian rupee was about 0.1 percent weaker versus the dollar after the Reserve Bank of India held its benchmark rates steady on Friday, a surprise move against market expectations it would raise rates to tackle inflationary pressures from the weak currency and high oil prices.

INDONESIAN RUPIAH

The Indonesian Rupiah touched a fresh low for the year versus the US dollar on Monday, trading at 15,240.

The rupiah has been one of Asia's worst performers this year as rising US yields and higher energy prices raised concerns over capital outflows and Indonesia's widening current account deficit. The currency is down nearly 11 percent this year.

"Given the hawkish US Fed, if US 10-year yields rise to 3.5 percent, yields on the 10Y Indonesian bonds can hit 9 percent which would put pressure on the rupiah," said Rohit Garg, a currency strategist with Bank of America Merrill Lynch.

Bank Indonesia (BI) Governor Perry Warjiyo said on Friday that BI has been actively intervening in the foreign exchange market to support the rupiah.