TOKYO - The dollar rallied against emerging market currencies on Wednesday as dealers moved into safer investments as persistent worries of a slowdown in China rekindled fears for the global economy.
After a string of gains in recent weeks, confidence took a hit on Tuesday when China said exports from the world's second-largest economy plunged by the most since the global financial crisis.
The figures rejuvenated fears about a "hard landing", sending traders into the Japanese yen - traditionally perceived as a safe haven in times of uncertainty.
The South Korean won fell 0.8 per cent, Malaysian ringgit was down 0.43 per cent and Taiwan dollar slipped 0.51 per cent. Singapore's dollar dropped 0.22 per cent and the Indonesian rupiah shed 0.30 per cent. Australia's dollar lost 0.1 per cent.
"As much as I would like to agree with the positive sentiment, several key macro headwinds remain on point and the drivers of the past week are now showing signs of topping out," Evan Lucas, a Melbourne-based market strategist at IG, wrote in a client email.
"Markets will remain volatile and trade in a direction-less manner." China's leaders are meeting this week for the annual rubber-stamp National People's Congress, where premier Li Keqiang at the weekend set a growth target of 6.5-7.0 per cent for this year.
On Wednesday, the dollar ticked down to 112.61 yen in mid-afternoon trade from 112.64 yen late Tuesday in New York.
Traders are awaiting Thursday's policy meeting of the European Central Bank, which is expected to see fresh stimulus measures for the 19-nation eurozone that could include another interest rate cut or an increase in its bond-buying programme.
The euro eased to 123.55 yen and $1.0969 from 124.02 yen and $1.1010 in US trade.