SINGAPORE (UPDATE) - Most emerging Asian currencies tumbled on Monday as a global sell-off of riskier assets intensified, pulling the Malaysian ringgit and the Philippine peso to their lowest levels in more than three years.
Financial turmoil in Argentina, fears of a sharper slowdown in China and expectations that the U.S. Federal Reserve will continue to trim its bond-buying programme later this week have sparked a broad bout of risk aversion and a flight to safer assets such as the yen.
The peso lost up to 0.3 percent to 45.45, its weakest since August 2010 amid market talk of selling from real money funds, traders said.
The Indonesian rupiah slides in Asian currencies, shedding 0.4 percent against the dollar, as it is seen more vulnerable to the Fed tapering than other Asian currencies because of the country's current account deficit.
The rupiah has eased 0.5 percent so far this year, outpacing most of its regional peers, according to Thomson Reuters data.
The ringgit fell as much as 0.4 percent to 3.3455 per dollar, its lowest since May 2010, pressured by selling by offshore funds, including real money accounts, traders said.
South Korea's won slid as much as 0.7 percent to 1,087.7, its weakest since Sept. 13, as offshore funds such as model accounts unloaded the currency.
"Investors are mostly avoiding Asian assets generally. I don't think bottom fishing is popular currently," said Frances Cheung, head of Asian rates strategy at Credit Agricole CIB in Hong Kong.
Asian stocks took a hit on worries about the impact of tightening credit conditions in China as Beijing seeks to curb growth in high-risk lending.
Other emerging market currencies from Turkey to Argentine were dumped last week, making investors nervous that the shakeout in markets could lead to a full-blown financial crisis.
Still, Asian currencies are likely to draw some support from stronger economic fundamentals, analysts said.
"Asian emerging countries have sizeable foreign exchange reserves and various forex swap deals. So we may see some limited crisis, but not a wider crisis," said Jeong My-young, Samsung Futures' research head in Seoul.
Some emerging Asian central banks such as Bank Indonesia have been spotted selling dollars to limit losses of their currencies, according to traders.
Credit Agricole's Cheung agreed with Samsung's Jeong.
"The fundamentals in Asia are different from those in Argentina, for example. That said, Asian assets would be impacted via the sentiment channel," Cheung said.
"Price actions would also be exaggerated as investors may choose to trim their positions ahead of the FOMC and Chinese New Year (holidays)," she said, referring to the Federal Open Market Committee on Tuesday and Wednesday.
The peso slid 0.3 percent to 45.45 per dollar, its weakest since August 2010, tracking its weakness in non-deliverable forwards.
Investors, however, stayed wary of possible intervention by the central bank.
"Since I am expecting some form of intervention at 45.45, I will take profits here, but just waiting for shallow dips to reinstate long dollar positions," said a senior Philippine bank trader in Manila.