Most Asian currencies fell on Friday as fears mounted of a deeper economic fallout from the coronavirus outbreak, but were on course to post weekly gains as the dollar declined due to a surprise Fed rate cut and expectations of more easing.

Despite the widening appeal of Asian assets, investors have largely stayed away due to heightened volatility amid fears the worst is yet to come. Dragging down investor sentiment further, S&P Global Rating estimated growth in the Asia-Pacific slowing to 4% this year, the lowest rate since the global financial crisis, saying the outbreak could cost economies in the region $211 billion.

"Sharply increased volatility in asset markets around the world is forcing an unwind of carry trades," said Wei Liang Chang, a Singapore-based macro strategist at DBS. "Even if growth fundamentals remain steady, higher yielding currencies such as INR and IDR might swing amidst lumpy outflows."

The Indonesian rupiah, one of the currencies favoured in carry trades by some, weakened 0.8% on Friday but was set for a weekly gain after a sharp drop last week. Earlier in the day, Bank Indonesia sought to reassure investors that the central bank was there and ready to intervene in the spot market. The country suffered an exodus of capital last week on fears over the spread of the virus. Barclays said in a note that it expected markets to focus on relative vulnerabilities in the emerging market space, with Asia more exposed to travel and tourism disruptions. US 10-year yields tumbled below 1% again overnight.

China's yuan stayed on track for a second straight weekly gain as Beijing's drastic measures to contain the outbreak have helped stem its spread within the country. The yuan's relative stability has also helped South Korea's won, which was poised for its best week since 2017.

"The won has benefited from the yuan's stability, hopes of a recovery in Chinese activity and a fiscal support package," Chang said, adding that DBS was still cautious about the currency given the wider spread of the virus in South Korea. On Friday, the yuan weakened 0.3%, while the won lost 0.9%. The Indian rupee, meanwhile, weakened 0.5%, putting it on track for its worst week since 2013. The ringgit fell 0.6%, while the Singapore dollar was down 0.2%. ING cut its annual growth forecast for the city state to 0.3% from 1% and said a recession seemed inevitable.