LONDON: The forint hit record lows on Thursday and central European bank shares tumbled after Switzerland abandoned its cap on the franc, reviving concerns about franc debt held by households and banks in Poland and Hungary.
Asian currencies had strengthened earlier, led by the rupee which benefited from India's first rate cut since May 2013.
As the Swiss franc soared almost 30 percent against the euro, the forint dropped 1.8 percent against the shared currency and other regional currencies also weakened on fears the surge in the franc would hurt those still holding debt denominated in the Swiss currency.
Poland's zloty lost 1 percent against the dollar, while the Czech crown fell 0.5 percent.
Eastern European banks were seen vulnerable to demands they should shoulder the burden of restructuring hard currency loans. Poland's mBank and BZW Bank fell 6 percent and 3 percent respectively, while Hungary's OTB Bank dropped 4 percent.
"There are still outstanding loans in euros and Swiss francs in Hungary and Poland. The bottom line is the corporate sector is still indebted and weakness in the forint feeds on itself, affects the corporate debt problem and inflates government debt ratios," said Manik Narain, emerging FX strategist at UBS.
These currencies' renewed declines against the euro will exacerbate pressures for those holding euro debt, Narain added
Elsewhere, a surprise interest rate cut by India's central bank pushed yields on 10-year government bonds to 7.65 percent, the lowest since July 2013 while the rupee strengthened 0.25 percent
The RBI also signalled it could cut further given signs of cooling inflation and what it said was a government commitment to contain the fiscal deficit.
Mumbai shares surged 2.5 percent while stimulus bets in China pushed Shanghai markets to close 3 percent higher . That helped drive emerging equities 0.5 percent higher
"In India, we think rates will fall further than what markets are pricing in," said Neil Shearing, head of emerging markets research at Capital Economics.
With inflation muted across much of the globe, partly on account of commodity prices, other emerging market central banks are expected to take similar measures to boost flagging growth, though fears of deflation may limit moves in some countries.
Central bank meetings are due in Chile and Peru where this week's precipitous drops in copper prices will pressure policymakers to consider stimulus.
Chile's peso hit 6-year lows on Wednesday.
Russia's rouble resumed its decline, losing 1 percent against the dollar as oil fell a further 2.5 percent.
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