TOKYO: The dollar advanced against emerging market currencies Tuesday as declining risk sentiment engulfed Asia, amid fears about the weak outlook for the Chinese economy.
A sell-off in Chinese stocks last week sent shock waves through international trading floors, as investors remain worried about low global demand for commodities on the back of slower growth in the world's number two economy.
"Everyone rational wants to sell, while everyone official has been told to buy," Michael Every, Hong Kong-based head of financial markets research at Rabobank Group, told Bloomberg news.
"By throwing good money after bad, it just delays the inevitable."
Beijing's weakening of its yuan currency -- raising questions about the opaqueness of its exchange rate policy -- also played a key role in the equities downturn.
On Tuesday, the greenback rose against riskier, but higher-yielding, emerging units. However, the US unit traded lower against the yen and the euro, fetching 117.52 yen from 117.77 yen Monday in New York, and trading at $1.0875 per euro from $1.0858 in US trade.
The Japanese currency, traditionally considered a safe haven in times of turmoil and uncertainty, has risen more than two percent against the greenback so far this year.
The Malaysian ringgit led declines against the dollar, falling 0.40 percent, as analysts warned the currency could weaken further on the back of the continuing slump in oil prices.
Malaysia is Asia's only major net petroleum exporter.
"Falling crude oil prices and uncertainty involving the slowdown in China are weighing on the ringgit," Zulkiflee Mohd. Nidzam, head of foreign exchange and bond trading Asian Finance Bank in Kuala Lumpur, told Bloomberg News.
"If these persist, the ringgit could weaken further to 4.45 a dollar in the near term."
Crude slipped below $31 for the first time in more than 12 years on signs key producer Iran could be allowed to export the commodity within weeks as Western countries prepare to lift embargoes after a deal over Tehran's nuclear programme.
Other emerging units also fell against the greenback.
The South Korean won dropped 0.03 percent and the Singapore dollar declined 0.31 percent.
The Thai baht and the Taiwan dollar were also down against the US currency.
The Indonesian rupiah bucked the trend, ticking up 0.04 percent.
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