Most Asian currencies weakened on Tuesday, as the prolonged Sino-US trade dispute and a free fall of the Argentine peso weighed on investors' risk appetite, while Singapore cutting its full-year growth forecast added more pressure in the region. Signals of a drawn out tussle between the US and China have kept global markets on edge and the lack of any progress in resolving their differences is a major worry for many Asian economies, which count Beijing as a top trade partner.
The prospects of a more aggressive approach by China to tackle the simmering protests in Hong Kong has also triggered a wave of risk aversion across global markets. In Argentina, the local peso weakened more than 15% against the dollar after President Mauricio Macri got thumped in Sunday's primary vote, a stark early warning for the incumbent ahead of the general election in October.
Meanwhile, the Singapore government cut its full-year forecast range for gross domestic product as global conditions were seen worsening and data confirmed the slowest growth rate in a decade amid mounting fears of recession in the city-state. Singapore's final second quarter GDP data on Tuesday showed a 3.3% quarter-on-quarter contraction on a seasonally-adjusted annualised basis, slightly smaller than the 3.4% decline seen in the government's advance estimate but lower than a 2.9% fall predicted in a Reuters poll.
"Singapore's sobering downward assessment of 2019 growth outlook is perhaps the most telling sign that the world is now bracing for the worse; even as it hopes for better," said Mizuho Bank's Vishnu Varathan in a note. The Indian rupee led losses on the day, weakening as much as 0.6% to 71.190 against the dollar, its lowest level since February 28.
The Indonesian rupiah, the South Korean won and the Thai baht depreciated up to 0.3% each. The Malaysian ringgit fell as much as 0.2%, while the Chinese yuan, the Singapore dollar and the Taiwan dollar depreciated slightly.