Most Asian currencies eased on Thursday, after US Federal Reserve Chair Jerome Powell's gloomy economic assessment led investors to offload risky assets and rush to the safety of the dollar.
On Wednesday, Powell warned of an "extended period" of weak economic growth which would be "subject to significant downside risks" as he talked down the prospect of negative interest rates in the United States.
Investors sought safe-assets after his comments, sparking a rally in the greenback, while US Treasury 10-year yields dropped.
"His views have muddied the waters sufficiently that the buyers have stood aside and sellers have pushed prices lower," said Chris Weston, head of research at Melbourne-based brokerage Pepperstone.
To make matters worse, a top World Health Organization official said the coronavirus that causes the COVID-19 disease may never go away and become endemic like HIV.
This week, markets were already reeling with the prospect that a second wave of coronavirus infections would further put off a global economic recovery after China and South Korea reported a spike in new cases.
The Indonesian rupiah and the South Korean won weakened 0.3% each, while the Chinese yuan gave up 0.1% to hit a one-week low.
Meanwhile, Bank Indonesia is set to fund part of the government's 150 trillion rupiah ($10.1 billion) economic recovery programme via more bond buying, officials said on Wednesday.
The Philippine peso, which is among the better performing Asian currencies this year, shed 0.2%.
A Reuters poll showed bullish bets on the peso rose for the first time since early March as restrictions were lifted and extended into June only in some of its cities.
Maybank analysts said that the search for yield may also support some bond market inflows in the near term for the Philippines.
Bearish positions on the yuan rose from a fortnight ago, a Reuters poll found, as investors fretted about a flaring up of trade tensions with the United States.
As China tries to regain footing amid a pandemic-fuelled slump in demand for its products, it is now grappling to hold onto the Phase 1 trade deal inked with the United States in January, as President Donald Trump steps up complaints about Beijing's handling of the pandemic.
"We see risk of further bilateral disputes ahead, especially as the coronavirus pandemic and low energy prices may make it more difficult for China to meet the trade deal's $200 billion purchase agreement," Goldman Sachs analysts wrote.
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