Asian markets were mostly lower Friday with the U.S. dollar falling to its weakest in almost five months against major currencies on investor worries that the United States would lose its AAA rating.
The dollar's descent was sparked on Thursday when Standard & Poor's cut its outlook on Britain's top rating to negative, bringing into focus other AAA-rated countries that are running into higher debt in an attempt to boost their economies with big spending plans.
A weaker dollar is also strengthening Asian currencies, which is bound to hurt the export-dependent continent and further raise doubts among investors about whether a gain of more than 50 percent in Asian shares excluding Japan since early March is excessive.
The dollar index, a gauge of its performance against six major currencies, fell as low as 80.257, its weakest since late December and was last down 0.2 percent at 80.302. The slide in the U.S. currency comes as investors are finding it harder to ignore the effect of the Federal Reserve's zero interest rate policy and its efforts to keep long-term rates low through direct purchases of U.S. government debt. The dollar slipped against the yen from late U.S. trade after falling as low as 93.86 yen on trading platform EBS, its lowest since mid-March.
Oil fell to $61 a barrel, as signs of job market weakness, in the form of a disappointing Fed regional survey and data showing continued claims rose to a fresh record, stoke concerns about the economy.
The Bank of Japan slightly upgraded its assessment on the economyfor the first time in nearly three years, while keeping interest rates on hold at 0.1 percent.
Japan's Nikkei 225 Average dipped 0.4 percent, with Canon and other exporters hurt by a stronger yen, but falls were limited by continued optimism that economic fundamentals are improving. Analysts said markets were not moved by the Bank of Japan's upgrading its assessment of the economy or a newspaper report about General Motors' possible bankruptcy filing, as these had largely been factored in.
South Korea's KOSPI closed 1.2 percent lower after volatile trade, led by key technology and auto exporters on renewed economic worries, but SK Networks rose after an affiliate announced plans to buy its broadband network.
Australian stocks fell 1.4 percent with miners including Rio Tinto and energy company Woodside Petroleum falling as global demand worries hit the prices of oil and base metals.
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Hong Kong shares dropped 0.8 percent with Lenovo Group down over 8 percent at one point after it posted a second straight quarterly loss that was worse than analysts forecasts as a result of restructuring costs. Hong Kong property developers jumped, outperforming the broad market after Morgan Stanley raised its view on the sector to attractive arguing in favor of a faster-than-expected stabilization in the global economy. Sun Hung Kai Properties which was raised to an overweight rating from equalweight, rose 5 percent. Sino Land, which was also among the brokerage's preferred picks, gained 5 percent.
Singapore's Straits Times Index was 1.6 percent higher after a late session surge.
China's Shanghai Composite Index dropped 0.5 percent in shrinking turnover with coal and non-ferrous metal shares weak, weighed down by worries about the strength of the economic recovery and high share valuations.