Most Asian currencies were set to record weekly losses on Friday as risk sentiment took a hit on fears that the rapidly-spreading coronavirus in China could hurt its economy. Amid persisting concerns about the outbreak, which has killed more than 200 people so far in China and infected thousands globally, the World Health Organization (WHO) declared a global emergency on Thursday.
Most major Asian economies count China as a crucial trade partner. The epidemic could temporarily reduce China's gross domestic product to 5%, while trade and tourism are likely to weigh on GDP for Australia and much of Asia, ANZ Research analysts said in a note.
However, some markets drew relief as the WHO stopped short of recommending any restrictions on trade and travel. The Philippine peso gained about 0.3%, but was poised for a 0.2% weekly loss and 0.5% monthly fall. Likewise, the Taiwan dollar appreciated about 0.2% to mark its best session in more than two weeks, but was set for a 0.7% weekly fall and 0.4% monthly loss.
The Taiwan dollar had slid nearly a percent on Thursday as investors priced in the virus impact while returning from a five-day Lunar New Year break. The Indian rupee was little changed a day ahead of the federal budget announcement as the country faces its worst economic slowdown in a decade. The currency is set to depreciate about 0.2% for the week.
The Thai baht, the Singapore dollar, the Indonesian rupiah and the Malaysian ringgit were all flat, but were on track to post steep weekly losses. The Chinese offshore yuan was little changed at 6.9789, but was 0.7% weaker for the week. Onshore markets were closed on account of the extended Lunar New year holidays and will resume trading on Feb. 3.
An official survey showed growth in China's factory activity faltered in January, as export orders fell, while the virus outbreak added to risks. The South Korean slipped up to 0.6% to its weakest level in seven weeks and was set for a fifth consecutive session of losses.
South Korea's December factory output exceeded forecasts as soaring chip production fuelled industrial activity, but the for the whole of last year, it fell 0.7%, in its worst reading since 1998.