The U.S. Federal Reserve's April minutes upped the prospect of an interest rate hike, sending the dollar higher and most Asia markets lower on Thursday.
In Japan, the Nikkei 225 eked ahead 1.97 points to 16,646.66.
The Japanese currency's strength has dampened earnings for the country's exporters.
The U.S. dollar was fetching 110.08 yen Thursday, after the Fed minutes spurred the pair as high as 110.37, its highest levels since late April, compared with levels around 109 on Wednesday.
In Hong Kong, the Hang Seng index fell 132.08 points, or 0.7%, to 19,694.33. Because the Hong Kong dollar is pegged to the greenback, any interest rate hikes in the U.S. are likely to flow through to the protectorate's economy.
Among its rating cuts to smaller Chinese banks, Deutsche Bank downgraded China Minsheng Bank's A-shares to sell and its Hong Kong-listed shares to hold. China Minsheng Bank's Hong Kong-listed shares were down 0.1% while its mainland-listed A-shares ended down 1.5%.
Australian markets were negative, as a 0.1% gain in the heavily weighted financials sub-index was offset by sharp drops in the energy and materials sub-indexes. Commodity prices, which are denominated in dollars, may take a hit from a stronger greenback.
Financial shares were higher as higher interest rates may spur better earnings in the sector. In Australia, ANZ ended up 0.9% and in Japan, Mitsubishi UFJ finished up 0.8%. In Hong Kong, HSBC tacked on 3.2%.
In Japan, Suzuki gained 3.5% after dropping 9.4% on Wednesday. The company on Wednesday confirmed media reports that it had used the wrong method to test the fuel economy of its cars in Japan.
Among energy plays, Australia's Woodside lost 1.2% and South Korea's S-Oil shed 2.8%. In Japan, Inpex dropped 5.9% after gaining more than 8% in the previous session. Hong Kong-listed Cnooc fell 1.4%.
Other resources stocks also fell. Heavyweights BHP Billiton and Rio Tinto ended down more than 3% each.
CHINA
The CSI 300 Index faded 5.54 points, or 0.2%, to 3,062.50
Some China banking shares lost ground. In a Thursday report, Deutsche Bank said it was increasingly concerned about shadow credit funded or channeled by Chinese banks, saying that the funds were essentially corporate loans that were not captured within the loan category on the banks' books.
Deutsche Bank said it expected regulators to tighten controls soon, likely pressuring the mainland's smaller banks as they were key players in this form of financing.
In other markets
In Korea, the Kospi Index lost 9.95 points, or 0.5%, to 1,946.78
In Singapore, the Straits Times Index gave back 37 points, or 1.3%, to 2,740.11
In Taiwan, the Taiex Index subtracted 63.7 points, or 0.8%, to 8,095.98
New Zealand’s NZX 50 dropped 79.01 points, or 1.1%, to 6,903.62
The ASX 200 eased 32.86 points, or 0.6%, to 5,323.34
