Most Asian currencies fell against the dollar on Friday as investors shunned riskier assets following a senior businessman's comment that the US mortgage crisis could lead the economy into a recession. The high-yielding Philippine peso fell as far as 46.89 per dollar, down half of a percent from Thursday's close.
The Indonesian rupiah, another high-yielder, slipped to 9,430 per dollar at one point, down almost 0.6 percent from late Asian trade on Thursday. "Overall, equity and bond markets have not stabilised yet, so people still choose to trade on short-term period - whenever they can take profits, they take profits," said a trader in Jakarta.
"Fears about credit markets are still there," he added. The Federal Reserve's cut in its discount rate last week and injections of funds into money markets by major central banks had helped soothe concerns about the credit market turmoil.
But worries returned after the head of the biggest US mortgage lender, Countrywide Financial Corp, said on Thursday the slump in the housing market could drag the US economy into recession. A US economic slowdown could hit Asia's booming export sector, and in turn put downward pressure on Asian currencies.
Analysts said equity markets still set the tone for Asian currencies, with MSCI's measure of Asia Pacific stocks excluding Japan down about 0.5 percent.
A rally in regional stocks in recent sessions had helped support most Asian currencies, but analysts said the recovery in investor sentiment was fragile.
"Asian FX sentiment is swinging back towards risk appetite. However, an early declaration that confidence is back is still premature in our view," J.P. Morgan strategists Claudio Piron and Yen Ping Ho said in a research note.
"The market will more likely enter a phase of consolidation before concrete confidence is established," they said. The Malaysian ringgit fell as low as 3.4940 per dollar, down about 0.6 percent from late Asian trade on Thursday. Malaysia's central bank is expected to keep its key interest rate steady at 3.50 percent later on Friday.
The Indian rupee, the top performing currency so far this year in Asia, fell 0.5 percent to 41.2 per dollar. Recent weakness in most Asian currencies has brought rare relief for regional central banks that have long struggled to contain currency appreciation to retain export competitiveness.