This intricate cloak belongs to Algernon, at Feldepost's Inn . It is a Nymph Cloak in everything but name. It offers a +2 Charisma bonus to the wearer, and the cloak can be used to charm creatures and persons. You can acquire it by slaying Algernon or picking his pockets. Once equipped you can access its ability via the Quick Item slot (it casts a Charm spell that lasts for one hour, with a -1 penalty to the save). After you acquire it (by pick pocketing only; Algernon must remain alive to collect the quest rewards), you can bring it to Pheirkas in NW Baldur's Gate to complete the Steal Algernon's Cloak side quests
Due to a coding error, rather than depleting once used, the number of charges wraps around from 1 charge to 65000 charges, more than will ever be used in the game. The Enhanced Edition fixes this, turning the cloak back into a one-use-per-day item.