Asian emerging market currencies and stocks were broadly lower on Tuesday amid concerns about China's economic outlook, with the South Korean won and the Thai baht leading losses as a rally in oil prices weighed on the region's net importing nations.
The Thai baht weakened 0.3% ahead of the country's central bank meeting on Wednesday where it is widely expected to leave its key interest rate at a record low, while the South Koran won fell up to 0.5%.
"A mix of higher energy prices and rising UST yields may not bode well for AXJs (Asian ex-Japan currencies), especially those net energy importers," analysts at Maybank wrote in a note.
Oil prices extended their rally into a sixth session amid continued concerns over tight supply, while US Treasury yields have been underpinned by the prospect of U.S tapering.
The baht is the region's worst performing currency this year, having weakened more than 10% against the dollar.
Thailand's tourism-reliant economy has been hammered by a spike in COVID-19 cases and a delayed reopening to visitors, prompting the World Bank to cut its 2021 economic growth outlook to 1% from the 2.2% projected in July.
However, Thai stocks edged higher as a rally in oil prices on supply concerns led to a jump in heavyweight energy stocks such as PTT Exploration and Production, offsetting a fall in banks.
Riskier emerging Asian stocks traded mostly in the red amid investor concerns about the future of cash-strapped real estate giant China Evergrande after it missed a bond interest payment last week, and worries power shortages in China could hurt its 2021 growth outlook.
With liabilities of $305 billion, Evergrande has sparked concerns its debt problems could spread through China's financial system and reverberate around the world - a worry that has eased as damage has so far been concentrated in the property sector.
China's central bank vowed on Monday to protect consumers exposed to the housing market and injected more cash into the banking system.
"Despite worries about a potential meltdown in China's property sector ostensibly being assuaged, the calm does not appear durable," Mizuho Bank analysts said in a note.
Philippine stocks fell over 1% and hit their lowest level in a week, while Taiwan equities dropped 1%.
On the upside, Malaysian stocks gained 0.3%, as exports in August rose 18.4% from a year earlier, by more than expected.
Highlights:
**Indonesian 10-year benchmark yields are up 4.6 basis points at 6.29%??
**Singapore's 10-year benchmark yield is up 1.2 basis points at 1.521%
**Malaysia's 10-year benchmark yield is unchanged at 3.443%??
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