SINGAPORE: The South Korean won was set on Friday for its worst week in seven months, leading weekly losses among emerging Asian currencies that have been hit by worries over China's slowing economy and expected further reductions in the US Federal Reserve's stimulus.
The won on Friday hit a near four-month low as offshore funds continued to sell the currency.
Most emerging Asian currencies were lower and their outlook remained murky after a disappointing China's manufacturing survey added to risk aversion, traders and analysts said.
In addition, the Fed is seen cutting another $10 billion in the central bank's monthly bond purchases at the Jan. 28-29 meeting on a solid recovery in the world's top economy.
Outside Asia, Argentina's peso on Thursday suffered the largest daily loss since the country's devastating 2002 financial crisis, as the central bank gave up its battle against the currency's slide.
"Asian currencies are likely to stay weaker, even though they have priced additional Fed tapering to some degree," said Yuna Park, a currency and bond analyst at Dongbu Securities in Seoul. "They are not free from China's slowdown and the dollar is forming a strengthening trend."
Most emerging Asian currencies appeared set to end the week lower.
The won has fallen 1.6 percent to the dollar so far this week, which would be the largest weekly loss since the week ended June 21, according to Thomson Reuters data.
Malaysia's ringgit has slid 1.0 percent against the greenback on selling from offshore funds including real money accounts, while the central bank was suspected of intervening to limit losses, traders said.
The Indian rupee has weakened 0.9 percent.
The Philippine peso and the Indonesian rupiah have eased 0.7 percent, respectively.
The Singapore dollar has been down 0.2 percent.
CIMB Investment Bank's head of regional interest rate and FX strategy Suresh Kumar Ramanathan said emerging Asian currencies, especially the won and the Singapore dollar may see "very marginal rebound," if the Fed reduces its stimulus by an expected $10 billion.
"Anything larger will pressure Asian units to weaken," said Ramanathan in Kuala Lumpur.
"Traders need to identify relative value trades, which means either going short euro/dollar or alternatively identifying stronger Asia-ex Japan FX such as the won, the yuan, the Singapore dollar and shorting the euro, which provides better value than a pure long Dollar/Asia trade."
WON
The won lost as much as 0.4 percent to 1,077.8 per dollar, its weakest since Sept. 30.
South Korean exporters bought the won on dips, but weaker Seoul shares amid foreign selling kept weighing on it.
"We believe the won's strength has run its course," ANZ said in a client note. "And while Korea's current account has not seen any negative effects from a strong won, we believe some impact will start to show next year."
ANZ recommended buying the three-month dollar/won non-deliverable forwards (NDFs) at 1,066.7 for a target of 1,100.
The NDFs barely changed at 1,082.1.
TAIWAN DOLLAR
The Taiwan dollar advanced from Thursday's close of 30.410 to the US dollar, the weakest domestic close since November 2011 due to the central bank's usual last-minute intervention.
Foreign investors cut some US dollar positions, but later began building them again. Exporters bought the Taiwan dollar when it weakened past 30.20.
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