TOKYO: Emerging market currencies went into a tailspin Thursday as the Singapore central bank's surprise decision to loosen monetary policy ignited fears about Asia's developing economies, sending shudders across the region.
The South Korean won took a bruising, falling more than one percent against the dollar, after a stunning electoral victory by the country's main opposition ended the conservative ruling party's 16-year parliamentary majority.
Singapore's dollar lost nearly one percent -- its biggest drop in five months -- after the city's monetary authority said it would ensure the unit does not appreciate against a basket of other currencies.
Analysts said the move stirred worries about Asia's developing economies and aggravated fears of a currency war, in which countries push down their units to gain an export advantage.
"Today's decision by the Monetary Authority of Singapore has put downward pressure on currencies in the Asia-Pacific region," Hirofumi Suzuki, a Singapore-based economist at Sumitomo Mitsui Banking Corporation, told Bloomberg News.
"Some market participants fear a revival of a competitive currency devaluation."
Worries about a currency war have been on the rise as Japanese officials hinted at a possible market intervention to stem the yen's recent rally.
In other trading, the oil-linked Malaysian ringgit fell 0.84 percent, Indonesia's rupiah was off 0.43 percent while the Taiwan dollar, Thai baht and Philippine peso also declined against the greenback.
The US dollar appreciated against the yen, trading well up from levels below 108 yen seen earlier in the week when worries about the state of the global economy sent investors racing to the safe-haven Japanese currency.
The dollar fetched 109.44 yen against 109.33 yen Wednesday in New York.
The euro edged down to $1.1268 from $1.1276 in US trade and was flat at 123.29 yen.
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