The Taiwan dollar hit a five-month low and the Indian rupee dipped to a one-year trough on Friday, with Asian currencies on track for their worst week in months as concerns over the eurozone's debt crisis dampened risk appetite. Concerns that Asia may increasingly feel the pinch from a slowdown in developed economies and growing expectations that Asian central banks may keep interest rates on hold the rest of this year also weighed on Asian currencies this week.
In a move that highlights how emerging Asian currencies have struggled recently, the dollar was on track for a 1.3 percent rise against the South Korean won this week, the won's worst showing since November 2010. Still, market players say emerging Asian currencies are likely to remain relatively stable for the most part.
It's unlikely at this stage that a trend of broad weakness in Asian currencies will emerge, said Perry Kojodjojo, FX strategist for HSBC in Hong Kong. The Taiwan dollar (TWD) touched a five-month low of 29.221 against the US dollar and Taiwan dollar's one-month non-deliverable forwards also hit a five-month trough at 29.18.
The Taiwan dollar's outlook seems bearish with Taiwan's economic growth likely to slow further and technical charts boding ill for the currency, said Jonathan Cavenagh, foreign exchange strategist for Westpac in Singapore. Net equity outflows from Taiwanese equities may also start to weigh on the Taiwan dollar, he said in a research note. The dollar has risen 0.5 percent against the rupiah this week, putting the rupiah on track for its worst weekly drop in three months.