The Korean won, Taiwan dollar and Singapore dollar maintained narrow ranges even as the yen shed nearly half a percent from Friday, driven lower by last week's weak Japanese economic data and waning expectations of any immediate change in China's currency regime.
That led the yen-won cross rate to weaken to around 9.67 won per yen, close to two-year lows struck in overnight deals.
"We think Korea has delinked from yen, as has the rest of Asia," said one Singapore-based trader. "And, now the problem is that the market has been caught long yen/won and is scrambling to sell."
Traders believe the South Korean authorities target the won's level against the yen, since the two countries export similar products. But for almost a month the yen has stayed below 10 won, the level that analysts believe is the lowest South Korea is comfortable with.
The won rose to near 1,022 a dollar on Monday, within striking distance of last week's seven-year peak, as Korean stocks hit a five-year high on news a fund had invested $975 million in Korean conglomerate LG Corp and its unit.
Won bulls shrugged off news of further issuance of bonds by the Bank of Korea, to absorb the won funds released during dollar-buying intervention.
Still, the worry of intervention weighed on currency markets in India, Taiwan, Thailand and Korea. Thailand's and India's reserves data showed heavy dollar-buying intervention.
The Taiwan dollar was held back from four-year highs beyond 31.50 by talk the central bank had intervened heavily to cap the currency last week.
Foreign portfolio investment inflows are putting upward pressure on the currency. Foreigners have bought close to T$100 billion of Taiwan shares since late January and the market hit its highest in nine months on Monday.
The Thai baht was in a range of 38.53 to 38.60 per dollar, while the Sing dollar was on the firmer side of 1.64 per dollar.
Analysts said Thailand had received over $1 billion of foreign portfolio investments so far in 2005, more than in any year from 2001 to 2004.
The moves in Hong Kong forwards and Taiwan dollar non-deliverable forwards also confirmed speculators were trimming their Asian positions, he added.