SINGAPORE -- The Indonesian rupiah plunged nearly 4.0 percent to a two-week trough against the dollar on Wednesday as fears of a deep global economic downturn depressed Asian currencies, which in turn spurred further hedging against currency weakness.

The South Korean won was among the worst hit, losing 2.2 percent against the dollar to its weakest close in two weeks. The rupiah, Asia's high-yielding and highly volatile currency, fell as far as 11,700 per dollar.

"There is increased demand for corporates as we head for the year end," said a trader in Jakarta. "Most corporates want to hedge their obligations up to the end of the year, so that they are not exposed to the volatility any more."

As a result of such hedging, forwards were priced in a weaker rupiah while the spot dollar was being bid at every dip, traders said.

Stock markets in Asia also weakened as investors turned even more wary of risk, egged on by deteriorating economic data from big economies and weak corporate earnings, such as troubles in the US automobile sector.

Currencies perceived as havens in Asia, such as the Singapore dollar and Thai baht barely moved. Yet the Indian rupee renewed its fall, hitting 48.74 per dollar and slipping more than a percent.

"Risk aversion, deleveraging and equity losses are all intertwined and the road back to global economic health remains littered with potholes that investors are yet to be convinced will be repaired by what really is now amounting to an incredible number of policy initiatives around the world," Societe Generale Asian strategist Patrick Bennett said in a note.

"A look at markets says more needs to be done."