Asian currencies have enjoyed solid gains recently as foreign investors resumed buying stocks in Asia and other riskier assets. Equity inflows to the region last week were the largest in four months, according to Deutsche Bank's data.
Earlier this year, Asian stocks and currencies suffered from profit taking amid worries about quickening inflation in the region.
"Asian currencies will be supported as investors are putting money into Asia, which has the best growth stories," said Perry Kojodjojo, a currency strategist at HSBC in Hong Kong.
Currency authorities in some countries may step in to curb gains in their currencies, but they will not push down them as they are fighting imported inflation, dealers and analysts said.
Earlier, data suggested that South Korea has decided to loosen its grip on the rising won, after actively intervening in the past to keep its currency weaker and exports more competitive.
Equity inflows to India, meanwhile, will help the underperforming rupee catch up to gains in other currencies, analysts said.
"The Indian rupee is seen performing better as positions in rupee are lighter than other Asian currencies. People are worried about India's current account deficit. However, ongoing capital account liberalization makes the current account deficit less of a risk," Perry said.
The rupee has risen a mere 0.4 percent against the dollar so far this year on worries about the country's current account deficits amid higher oil prices, while the won and the rupiah have jumped 4 percent.
Equity flows will be able to offset worries about the currency account deficit "for now," said Nizam Idris, a EM FX strategist at UBS in Singapore.
Foreign investors were net buyers of Indian stocks from March 23 through to Friday. India's local currency market was closed for a holiday.
WON
The won found support from foreign investors' continuous stock purchases and option related demand from offshore players.
It strengthened to as much as 1,184.0 per dollar, the firmest since Sept 10, 2008. But it failed to extend gains as the foreign exchange authorities were spotted buying dollars, dealers said.
Investors said recent gains were overdone, with the dollar/won's 14-day relative strength index down to 26.861, the lowest since Oct 7, 2010, indicating the dollar has been oversold against the South Korean unit.
Dollar demand linked to local companies' dividend payments to foreign shareholders also put pressure on the won, dealers said.
South Korean companies are set to pay about 1 trillion won ($920 million) in dividends to foreign stakeholders this week, with tobacco maker KT&G paying about 240 billion won in dividends, according to Reuters calculations.
Still, the won is seen rising further as the 1,100 level, which the authorities had been defending, becomes a strong support line, dealers said.
Although the authorities have been spotted buying dollars to slow the won's rise, they are unlikely to conduct massive dollar-buying intervention to push down the won, and any pullbacks will be a chance to buy it on dips, they added.
"Offshore players unloaded dollars when the dollar/won gained (after intervention). Downside sentiment is so strong that few can reverse it," said a foreign bank dealer in Seoul.
Foreign investors bought Seoul stocks again, extending their buying streak to a 14 consecutive session.
RUPIAH
The rupiah hit a fresh 4-year high against the dollar as local interbank players chased the Indonesian currency, with the central bank also loosening the reins on the currency. Inflows to the country's stocks and bonds also supported the rupiah.
It rose to as much as 8,662 per dollar, the strongest since May 2007.
State-run banks were spotted buying dollars at 8,675 initially, but later lowered dollar bids to the 8,670 and 8,660 levels, dealers said.
Earlier, a deputy central bank governor said the central bank sees room for more rupiah gains.
Investors are keeping an eye on the finance ministry's bond auction on Tuesday to aim to raise 7 trillion rupiah ($802.8 million).