Emerging markets were rattled again, with the Argentine peso, Turkish lira and Indonesian rupiah tumbling overnight. The negative sentiment is set to weigh on other Asian currencies, although they will remain fairly resilient to the impact, analysts say.
The peso crashed nearly 12 percent, following a domestic crisis which saw its central bank hike rates to 60 percent in an attempt to shore up its currency. Extending its steep losses this year, the lira fell 2.94 percent to a fourth straight day of declines.
"Emerging markets will remain pressured by the Argentine peso and Turkish lira crises," DBS analysts said in a note Friday morning. The peso is down more than 45 percent against the greenback this year.
"Argentina has hiked rates to a record 60% to address double-digit inflation, but this would exacerbate the recession, and coupled with budget/current account deficits of around 5% of GDP, have increased the risk of for the government to default on its debt," they added.
The MSCI Emerging Markets Currency Index has declined 2.1 percent since the start of August, and has tumbled 5.1 percent since the beginning of this year.