Most emerging Asian currencies weakened in volatile trading as Republican Donald Trump unexpectedly defeated heavily favoured Democratic rival Hillary Clinton in the US presidential race, prompting investors to flee to safe-haven assets. South Korea's won touched a four-month low, leading regional losses.
The Philippine peso hit a seven-year trough and the Malaysian ringgit slumped to its weakest in more than eight months, tracking a tumble in oil prices. "Sea of red on my screen," said Stephen Innes, senior FX trader for FX broker OANDA in Singapore. Some emerging Asian currencies started the day firmer on bets that Clinton would win, but they lost ground once Trump started moving ahead in battleground states, including Florida and Ohio.
Asian stocks tumbled, while some regional government bond prices rose. The Mexican peso plunged more than 13 percent to a record low, as Trump's trade policies are considered deeply negative for the export-heavy economy. Emerging Asian currencies were also seen as vulnerable to a Trump presidency due to his protectionist stance on trade. "It is like Brexit unfolding. Markets are now reacting to a Trump lead," said Christopher Wong, a senior FX strategist for Maybank, referring to Britain's unexpected decision in June to exit the European Union.
"Risk proxies such as the won will be hit harder among emerging Asian currencies." The won lost as much as 1.9 percent to 1,157.3 per dollar, its weakest since July 8. South Korea's main stock exchange slid 2.3 percent as foreign investors sold for a sixth straight session. The foreign exchange authorities were suspected of intervening to limit the won's downside, traders said, with a 200-day moving average chart support at 1,155.0 per dollar.
Still, the outlook for the won remained bearish, traders and analysts said. "Considering Trump's protectionist trade stance and military issues, it is difficult to compare the impact on the won with other Asian currencies," said a South Korean bank trader in Seoul. "The authorities are seen trying to defend the won, it looks beyond their ability. We will see 1,160 in offshore markets." The peso slumped to 48.85 per dollar, its weakest since September 2009, as offshore funds dumped the Philippine currency.
Manila stocks tumbled 2.6 percent, hurting sentiment toward the peso. The peso recovered much of its earlier losses with caution growing over possible intervention by the central bank to support the currency, though traders were looking to sell the peso on any rebounds. A senior Philippine bank trader in Manila expected the peso to weaken to 49.50 per dollar in the medium term, due to uncertainties over migration, remittances and exports.