Most Asian currencies slipped against the dollar on Friday as jitters over heightened tensions in Ukraine and worries over an economic slowdown in China curbed investors' appetite for riskier assets. Russia launched new military exercises near its border with Ukraine on Thursday, showing no sign of backing down on plans to annex its neighbour's Crimea region despite a stronger-than-expected drive for sanctions from the EU and United States.
At the UN Security Council, the United States circulated a draft resolution that would declare illegal Sunday's planned referendum on independence for Ukraine's Crimea region. "Crimea risk is very real ... Only the foolhardy will short dollar/Asia this weekend," said a trader for a Malaysian bank in Kuala Lumpur.
The Indonesian rupiah, the best performing emerging Asian currency so far this year, bucked the trend and rose 0.2 percent. The rupiah was on track for a gain of about 0.7 percent on the week. The Chinese yuan saw a rise in implied volatilities this week, with the bid rate for dollar/yuan three-month implied volatility now at 2.050 percent, up from 1.475 percent at the end of last week and well above a mid-February trough of 0.750 percent.
The South Korean won fell to its weakest closing level in more than a week on Friday, as worse-than-expected Chinese data rekindled concerns about the region's economic powerhouse, although exporters' dollar-selling limited the decline. The local currency was last quoted at 1,072.8 against the dollar, the weakest since March 4, and down 0.4 percent compared with Thursday's closing level of 1,069.0. The won shed 1.1 percent during the week, its biggest weekly fall since the week ended January 24.
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