SINGAPORE: The Indian rupee fell on worries about the impact of proposed tax laws on fund inflows, leading slides among emerging Asian currencies as soft U.S. economic data caused investors to cut bets on riskier assets before the end of the quarter.
Regional units were also softer versus the yen on repatriation flows to Japan linked to the close of the country's financial year, while local importers bought dollars for payments.
Data overnight highlighted that while the U.S. economy is slowly improving, it is not building up much momentum.
New orders for U.S. durable goods increased only modestly in February, missing analyst forecasts, and a gauge of future business investment also fell short of expectations, raising the prospect that economic growth in the first quarter could be sluggish.
China's stock markets suffered heavy losses for a second consecutive session on resurfacing jitters on a hard economic landing for the world's second-largest economy.
Dealers and analysts said concern over slowing global growth was expected to continue to weigh on emerging Asian currencies in the second quarter.
"Asia ex-Japan currencies are increasingly pricing in the combined risk of slowdowns in the United States and China - and there is more to come," said Callum Henderson, global head of FX research with Standard Chartered Bank in Singapore.
"The second quarter typically sees poor seasonals for Asia ex-Japan currencies and in the context of the recent decline in volatility we see this as a good time to be buying hedge protection against Asia ex-Japan underlying assets."
Losses in recent weeks have pared some of the gains the currencies enjoyed earlier this year as foreign funds flowed back into Asia, backed by ample liquidity from monetary policy easing by major central banks.
"The pace of returns for Asia ex-Japan FX has significantly slowed down since late February," said Suresh Kumar Ramanathan, regional rates and foreign exchange strategist at CIMB Investment Bank in Kuala Lumpur.
"We see this coinciding with the strength of the dollar and market bias of slowing Asian economies, in line with expectations of an easier monetary policy stance ahead," Ramanathan added.
RUPEE
Dollar/rupee rose on lingering concern that proposed tax laws could trigger a selloff in local equities by foreign funds and as oil importers bought the pair.
"The policy confusion, reform paralysis and growth worries are all hurting the currency," said a foreign exchange trader with a foreign bank.
BAHT
Dollar/baht briefly broke through resistance around 30.860, the 38.2 percent Fibonacci retracement of its January-February slides.
If the pair ends the day above the retracement and breaches a 55-day moving average, which stands at 30.879, it may head to 30.980, the rebound high in early February.
The next level would be 31.040-31.060, where a 100-day moving average and the 50 percent retracement sit.
WON
South Korean importers bought dollar/won and some interbank speculators added long positions amid worries about a global economic slowdown.
Some dealers suspected that yen/won demand also supported dollar/won.
But market players hesitated to chase dollar/won around 1,140 as local exporters sold it there.
