The South Korean won on Monday fell to its lowest against the yen since March 2009 and the Singapore dollar saw the biggest single-day loss since early August, with a broad range of funds pulling money out of emerging Asia on fears of a Greek default.
Asian authorities stepped into currency markets and sold some of their big piles of US dollar reserves to keep their own currencies from falling too rapidly, having spent billions of dollars since last Wednesday, traders estimated.
Leveraged investors, macro-driven funds and interbank speculators sold the Singapore dollar, and offshore institutional investors were the main players dumping the won.
After months of resilience, emerging Asian currencies have quickly given way over the past week, led by moves in offshore forwards.
The position reduction and in some cases liquidation was by no means focused only on Asia, with the 1-month non-deliverable forward for dollar/Brazilian real on Friday hitting the highest since November 2010.
Still, the degree of the selloff in Asia has surprised traders and analysts as the relatively strong underlying fundamentals in the region have not changed much. Strategists were busy recommending trades that anticipated further weakness in Asian currencies.
"We are positioning for further softness in Asia ex-Japan currencies. What stands out in the current environment is the Hong Kong dollar... it makes sense to use the HKD to remain long against shorting the rest of AXJ FX - including the AUD and NZD," said Suresh Kumar Ramanathan, regional rates and foreign exchange strategist for CIMB Investment Bank in Kuala Lumpur.
Asian foreign exchange authorities are expected to keep buying their own currencies to ease volatility, though would only slow the move lower in their currencies rather than draw a clear line in the sand, especially since weaker currencies ultimately help their exports.
"Asian central banks are allowing FX weakness as a buffer, to some degree, to economic headwinds as a way of easing monetary conditions," said Sacha Tihanyi, senior currency strategist for Scotia Capital in Hong Kong.
SINGAPORE DOLLAR: The Singapore dollar weakened past a 200-day moving average, shedding 1.4 percent against the US dollar.
The Singapore dollar may weaken more, probably to 1.2626 per dollar, the 50 percent Fibonacci retracement of its strength between November last year and late July, if it ends the day softer than the 200-day moving average of 1.2491.
WON: The South Korean won hit a six-month low against the dollar on real money funds' selling and touched its weakest in two and a half years against the yen.
The won also came under pressure from bond outflows, dealers said.
The foreign exchange authorities were spotted buying the won, especially when it weakened past 1,120 per dollar, but investors took the intervention as chances to sell the won on rallies, dealers said.
Some dealers say authorities may not actively cap the won's falls.
"They may be concerned more about exports amid worries over Europe. They may not waste bullets around this level," said a foreign bank dealer in Seoul.
RUPIAH: The Indonesian central bank was spotted buying the rupiah from 8,800 per dollar to 8,850.
"It totally depends on how many dollars the central bank is willing to give. If it is a small amount, USD/IDR could break 8,900 even today. If BI cannot guard the volatility, it will be exaggerated by short term investors and will drag the IDR even weaker. It will hit the long-term investors eventually," said a Jakarta-based dealer.
Another dealer, saying the central bank had not been too aggressive, estimated that it sold $250 million to support the rupiah.