Asian units slip on Sino-US tensions

Asian currencies slipped on Monday on growing tensions between the United States and China over the origin of the coronavirus, while the Malaysian ringgit weakened ahead of a central bank meeting and on a grim economic forecast for 2020.

Secretary of State Mike Pompeo said on Sunday that there was "a significant amount of evidence" that the new coronavirus emerged from a Chinese laboratory.

Pompeo's comment comes days after US President Donald Trump threatened to impose new tariffs on Beijing in retaliation over the coronavirus outbreak.

With Chinese markets closed for a holiday, the offshore yuan traded largely flat, while other Asian currencies slipped into the negative territory.

The Indonesian rupiah weakened 1.5% and was the worst performer in the region. The country's inflation rate in April slowed more than expected as virus-driven curbs dampen demand.

Meanwhile, South Korean won shed 0.7% against the dollar, weighed lower by weaker factory data and tensions between North and South Korea further.

Worldwide lockdowns sent South Korea's factory activity in April tumbling at its sharpest pace since the global financial crisis, with exporters battered by the worst slump in orders in 16 years.

Moreover, multiple gunshots fired from North Korea early on Sunday towards a guard post in South Korea also frayed investor sentiment.

Malaysian ringgit weakened as much as 1.2%, pressured by broader market sentiment and ahead of the country's central bank meeting on Tuesday.

Bank Negara Malaysia is expected to make the biggest cut to its benchmark interest rate since 2009, according to a Reuters poll, in an effort to cushion the blow from the coronavirus pandemic.

Malaysia's finance minister said on Saturday that the country's economy in 2020 could shrink more than initially forecast.

With emerging Asian central banks adopting unconventional monetary policies to boost their economies, analysts at Mizuho say these policies will likely result in an "FX spillover" and expose Asian units to potential vulnerabilities.