Most emerging Asian currencies eased on Friday and are set to post weekly losses, dampened by waning risk appetite and a looming US interest rate rise amid sluggish global growth. The South Korean won hit its weakest in more than one month as continuous foreign selling dragged Seoul shares lower. Indonesia's rupiah and Malaysia's ringgit slid as lower raw material prices underscored concerns over their commodity exports.
Asian equities lost more than 1 percent on resource stocks as commodity prices dropped to multi-year lows with worries that a global economic slowdown may exacerbate the supply glut. The US dollar stayed weaker against a basket of six major currencies on soured risk sentiment. "Despite the dollar's correction, Asian currencies are likely to stay weak given expectations of a US rate hike and growth concerns," said Yuna Park, a currency and bond analyst at Dongbu Securities in Seoul.
"Money is leaving from emerging countries again, indicating anxiety is still there." US Federal Reserve officials on Thursday backed a December interest rate hike with one key central banker saying the risk of waiting too long was now roughly in balance with the risk of moving too soon to normalise rates after seven years near zero. Sentiment towards emerging Asian currencies already deteriorated in the last two weeks on growing expectations that the Fed would raise interest rates at its next meeting, a Reuters poll showed on Thursday.
The won led weekly losses among regional currencies with a 1.9 percent slide against the dollar, according to Thomson Reuters data. Offshore funds sold the South Korean currency as foreign investors were net sellers in the main local stock market over four consecutive sessions. They unloaded a combined net 724.4 billion won ($622.8 million) worth of equities during the period, the Korea Exchange data showed. The ringgit has lost 1.4 percent this week as crude prices fell to a near 6-1/2-year low, adding to worries about Malaysia's falling oil and gas revenue.
The worst-performing Asian currency of the year barely moved after data showed Malaysia's economic growth and current account surplus in the third quarter were at their lowest in more than two years. Thailand's baht has shed 0.8 percent so far this week on stock and bond outflows. The rupiah has fallen 0.7 percent for the week. Over the week, the Indian rupee slid 0.6 percent after Prime Minister Narendra Modi's heavy defeat in Bihar's state elections raised concerns the government would struggle to pass policy reforms. China's yuan has declined 0.3 percent so far this week on concerns over a deepening slowdown in the world's second-largest economy. The Philippine peso eased 0.2 percent as foreign investors continued to dump local stocks.