The Indian rupee sank to yet another record low on Wednesday, while most other Asian currencies traded cautiously in tight ranges against the backdrop of US-China trade tensions.

The absence of new controversies in international trade since the start of the week had provided investors some hope, but it faded on Wednesday amid verbal sparring between Washington and Beijing.

China told the World Trade Organisation (WTO) on Tuesday it wanted $7 billion a year in sanctions on the United States in retaliation for Washington's non-compliance with a ruling in a dispute over US dumping duties.

With US President Donald Trump's threat to impose tariffs on more Chinese goods not materialising so far this week, risk sentiment in emerging markets is likely at a stasis point, OCBC Bank said in a note.

The dollar index, which measures the greenback against six major peers, dipped to 95.168. Indonesia's rupiah, the region's second worst-performing currency this year, resumed trade after a public holiday and weakened 0.2 per cent to 14,885 per dollar.

Indonesia has been extremely susceptible to emerging market outflows as fears of contagion from crises in Turkey and Argentina kept investors risk-averse. The Indonesian 10-year bond yield rose to its highest since early 2016 at 8.629 per cent as bond prices fell.

OCBC expects Bank Indonesia, one of the most active central banks during the emerging market crisis, to hike rates again in September. Trading for the first time this week after public holidays, Malaysia's ringgit languished around late-2017 lows against the dollar. It was last at 4.147. The Chinese yuan eased slightly to 6.873 to the dollar.

The rupee reached a new low against the US dollar on Wednesday, but held off the pivotal 73 level with two traders spotting mild intervention by the central bank. The currency pulled back from intraday lows, and was trading strong at 72.34.

A slew of data is expected later in the day, including inflation, which is expected to slip below the Reserve Bank of India's (RBI) medium-term target in August and would likely motivate the central bank to keep interest rates on hold, a Reuters poll showed. “This arguably buys the RBI some breathing space. But this is hollow relief,” said Mizuho Bank in a note, amid rising oil prices and higher food inflation.

India's benchmark 10-year bond yield rose even higher on Wednesday to 8.231 per cent, its highest since mid-November 2014.

The won was 0.3 per cent weaker at 1,128.1. South Korea's unemployment rate hit an eight-year high in August, adding to economic policy frustrations and political challenges for President Moon Jae-in.

“The weakening labour environment is likely a reflection of the ongoing stagnation of its manufacturing output and weakening export environment, while job losses were widespread in the service sectors as industries adjust to the minimum wage increases,” said OCBC Bank.