Global equity turmoil weighs on most Asian currencies

Most Asian currencies weakened against the US dollar on Friday as regional equity markets were hit by a fresh wave of selling and investors retreated from riskier assets globally. Another plunge in US stocks overnight, triggered by a jump in bond yields and fears of sharper interest rate rises, left Asian markets in a sea of red.
"The issue is not so much the 3 percent level (of U.S benchmark bond yields) but rather the pace that bond yields have been rising in the US that is sending the markets into disarray," said Stephen Innes, head of trading for Asia Pacific at OANDA in a note. "The rapidity of the moves has caught the markets by surprise, and we are going through the predictable panicked repricing of most asset classes."
Benchmark 10-year note yields rose as high as 2.884 percent on Thursday, nearing a four-year high. Worsening risk sentiment and higher volatility also means many market players are now being forced to close their existing positions rather than making new bets. The re-rating of assets has had repercussions across Asia as the MSCI's broadest index of Asia-Pacific shares outside Japan dropped 2.3 percent to a two-month low.
South Korea's won was 0.3 percent weaker against the dollar as the country's benchmark equity index touched its lowest in the day since September 2017. The Malaysian ringgit shed 0.3 percent as factory output in December rose at a much slower pace than anticipated by a Reuters poll. The Singapore dollar repeated Thursday's performance as it slipped 0.1 percent as equities lost as much as 2.2 percent.
Meanwhile, the Indian rupee was 0.2 percent weaker, weakening for the second straight week. Only the Thai baht firmed in the region, by a marginal 0.1 percent. Thailand is due to report data on its foreign exchange reserves later in the day. The Philippine peso was hit the hardest in the region as it weakened 0.6 percent with the main stock index sliding as much as 2.6 percent. The currency saw its the worst day since June, 2016, on Friday. Trade data for December 2017 ensured the full-year trade deficit widened to a record as imports for the year jumped 10.2 percent.
China's yuan weakened 0.2 percent against the dollar as equity markets sank. The benchmark Shanghai Composite Index tumbled as much as 5.9 percent at one point to a nine-month low before recouping some losses, while the blue-chip CSI300 dived as much as 6.2 percent. China's central bank said on Friday it has released temporary liquidity worth almost 2 trillion yuan ($316.28 billion) to satisfy cash demand before the long Lunar New Year holidays.