Most emerging Asian currencies fell on Wednesday as the dollar traded close to a 16-month peak and US Treasury yields jumped, with the South Korean won bearing the brunt of losses after a recent surge of COVID-19 cases in the country.
The won weakened by as much as 0.5%, followed by the Indonesian rupiah and the Malaysian ringgit shedding 0.3% each.
A run of strong economic data in the US, including a surge in October retail sales, has kept the dollar hovering close to a 1-1/2-year peak for the past few days.
"Regional currencies are likely affected by the rising US Treasury yields as inflation concerns as well as strong U.S data raised expectations for the Federal Reserve (Fed) to quicken monetary policy normalization," said Fiona Lim, an FX strategist with Maybank.
If the Fed starts hiking rates too soon, it will be at odds with most Asian central banks to stand pat on policy to help their economies recover from the pandemic-driven slump.
US bond yields rose overnight ahead of the US Treasury's sale of 20-year paper later in the day.
They've been on an upswing since data showed last Wednesday that US consumer prices for October posted their biggest gain in more than three decades.
The region's stock markets were mixed, with South Korean stocks falling 1%, on track for their worst day in a week after the country reported 3,187 new infections for Tuesday, the second-highest since the pandemic began.
Singaporean stocks shed 0.4%, even as the city-state's October non-oil domestic exports (NODX) jumped 17.9% from a year earlier, beating forecasts.
"The Singapore Index may be seeing some near-term distribution after the catalysts from economic reopening and earnings season have been priced," Jun Rong Yeap, a market strategist at IG, wrote in a note. Japanese shares reversed early gains on concerns over rising costs and a weaker yen.
On the upside, shares in Thailand, Indonesia and Taiwan gained between 0.2% to 0.3%.
Investors will now turn their focus to policy reviews by the Indonesian and Philippine central banks on Thursday. Both are expected to hold interest rates, according to Reuters polls.
**Indonesian 10-year benchmark yields are down 0.5 basis points at 6.192%
**Singapore's 10-year benchmark yield is up 0.5 basis points at 1.8%
**Mapletree Logistics Trust and Wilmar International are top losers on the Singapore benchmark