The Korean won rallied as far as 1,040 a dollar on Friday, a 2-1/2-week high. It finished the week 1.7 percent higher. The Singapore dollar was largely steady on Friday around 1.6865/75 per dollar but notched up half a percent in gains this week.
Analysts said they expected the dollar to continue setting direction for Asian currencies in coming weeks as it swings against the majors, and that regional trade would be quiet next week when some centres are closed for festival holidays.
"We continue to see dollar/yen trading higher as yield spreads move further in favour of the dollar and that's going to be the main influence," Ray Farris, CFSB's currency strategist said.
"I don't see the Chinese doing anything of substance anytime soon." In the absence of other factors, markets focused on the Chinese yuan, which hit its highest levels since being revalued on July 21.
The yen too was supported by a Financial Times report that US Treasury Secretary John Snow had told China's leaders that Washington wanted to see another revaluation of the yuan before President George W. Bush visits Beijing next month.
The yen hovered around 115.20 a dollar, having come off Thursday's 2-year lows near 116.20 as worries over an investigation into accounting practices at General Motors and concerns ahead of US output data weighed on the dollar.
Markets have been speculating China may let the yuan appreciate faster ahead of the US administration's report on currency practices of key trade partners in November.
But non-deliverable forwards on the yuan barely showed any reaction. Three month non-deliverable forwards showed the yuan being traded at 8.02 per dollar, 0.8 percent higher than the spot rate of 8.0840. That 3-month NDF had hit 8.01 on Wednesday.
Bhanu Baweja, UBS's currency strategist, said offshore markets had already priced in increasing flexibility in the yuan over the next 12 months.
"The markets are anticipating that China will be more flexible and that they will become more flexible at an increasing pace. At this pace they are going nowhere," Baweja said.
"China will do something but that's largely priced in. The spot closing rate has moved lower every day, but that's in the price," Baweja added, while pointing out that offshore markets were pricing the yuan at 7.8 per dollar at the end of a year, or a 3.6 percent appreciation from Friday's spot rate.
"For dollar/Asia to come lower, you would need the NDF curve to come lower substantially." Baweja also said that there was no real case for any appreciation in the Asian currencies, and even if the oversold yen rallied, it would probably not rise past levels around 114 a dollar. The Korean won, Thai baht and Singapore dollar could rally a bit if the yen recovered, he said.