* Most set for weekly gains as Fed rate cut widens
differentials
* S&P sees Asia-Pacific growth slowing to lowest rate since
2008
* South Korean won set for best week since 2017, tracking
yuan
(Adds text, updates prices)
By Nikhil Nainan
March 6 (Reuters) - Most Asian currencies fell on Friday as
fears mounted of a deeper economic fallout from the coronavirus
outbreak, but were on course to post weekly gains as the dollar
declined due to a surprise Fed rate cut and expectations of more
easing.
Despite the widening appeal of Asian assets, investors have
largely stayed away due to heightened volatility amid fears the
worst is yet to come.
Dragging down investor sentiment further, S&P Global Rating
estimated growth in the Asia-Pacific slowing to 4% this year,
the lowest rate since the global financial crisis, saying the
outbreak could cost economies in the region $211 billion.
"Sharply increased volatility in asset markets around the
world is forcing an unwind of carry trades," said Wei Liang
Chang, a Singapore-based macro strategist at DBS.
"Even if growth fundamentals remain steady, higher yielding
currencies such as INR and IDR might swing amidst lumpy
outflows."
The Indonesian rupiah IDR= , one of the currencies favoured
in carry trades by some, weakened 0.8% on Friday but was set for
a weekly gain after a sharp drop last week.
Earlier in the day, Bank Indonesia sought to reassure
investors that the central bank was there and ready to intervene
in the spot market. The country suffered an exodus of capital
last week on fears over the spread of the virus. Barclays said in a note that it expected markets to focus on
relative vulnerabilities in the emerging market space, with
Asia more exposed to travel and tourism disruptions. U.S.
10-year yields US10YT=RR tumbled below 1% again overnight.
China's yuan CNY=CFXS stayed on track for a second
straight weekly gain as Beijing's drastic measures to contain
the outbreak have helped stem its spread within the country.
The yuan's relative stability has also helped South Korea's
won KRW=KFTC , which was poised for its best week since 2017.
"The won has benefited from the yuan's stability, hopes of a
recovery in Chinese activity and a fiscal support package,"
Chang said, adding that DBS was still cautious about the
currency given the wider spread of the virus in South Korea.
On Friday, the yuan weakened 0.3%, while the won lost 0.9%.
The Indian rupee INR=IN , meanwhile, weakened 0.5%, putting
it on track for its worst week since 2013.
The ringgit MYR= fell 0.6%, while the Singapore dollar
SGD= was down 0.2%. ING cut its annual growth forecast for the
city state to 0.3% from 1% and said a recession seemed
inevitable.
CURRENCIES VS U.S. DOLLAR
Change on the day at 0514 GMT
Currency Latest bid Previous day Pct Move
Japan yen 105.780 106.16 +0.36
Sing dlr 1.385 1.3827 -0.19
Taiwan dlr 29.990 29.960 -0.10
Korean won 1192.400 1181.2 -0.94
Baht 31.620 31.55 -0.22
Peso 50.770 50.84 +0.14
Rupiah 14270.000 14160 -0.77
Rupee 73.790 73.35 -0.60
Ringgit 4.185 4.16 -0.60
Yuan 6.957 6.9368 -0.29
Change so far in 2020
Currency Latest bid End 2019 Pct Move
Japan yen 105.780 108.61 +2.68
Sing dlr 1.385 1.3444 -2.95
Taiwan dlr 29.990 30.106 +0.39
Korean won 1192.400 1156.40 -3.02
Baht 31.620 29.91 -5.41
Peso 50.770 50.65 -0.24
Rupiah 14270.000 13880 -2.73
Rupee 73.790 71.38 -3.27
Ringgit 4.185 4.0890 -2.29
Yuan 6.957 6.9632 +0.09