Emerging-market currencies sank in Asia yesterday, with the Indian rupee at a record low as dealers fear contagion from financial crises in Argentina and Turkey.

A report that United States President Donald Trump is planning to impose tariffs on a further US$200 billion (S$274 billion) worth of Chinese imports as soon as next week has added to the fright on trading floors, with most equity markets across the region also down.

Forex traders have been dumping emerging-market (EM) currencies after Argentina's peso became the latest to hit the buffers on concerns about the country's economy.

The peso hit a record low near 40 to the US dollar on Thursday, despite the central bank hiking interest rates 15 percentage points to 60 per cent. It has lost 53 per cent of its value since the start of the year as the government of President Mauricio Macri faces a financial catastrophe.

At the same time, Turkey's lira continues to face heavy selling after a deputy central bank governor resigned with the economy facing a possible recession, made worse by US sanctions. The unit has also lost about half its value this year.

The flight out of EM units hit India, where the rupee fell to 71 against the dollar for the first time yesterday. The embattled currency has lost about 10 per cent this year. The Indonesian rupiah also dived, briefly hitting 14,750 for the first time since the 1998 Asian financial crisis.

Both nations' problems have been exacerbated by ballooning current account deficits, while a series of interest rate hikes has failed to stanch the selling in their currencies.

"The spillover from the resurfacing emerging-market turmoil in the Argentina peso and Turkish lira is weighing on EM Asia currencies," Mr Ken Cheung, senior FX strategist at Mizuho Bank in Singapore, told Bloomberg News.

Other EM and high-yielding currencies were also in the red, with South Korea's won down 0.4 per cent, Australia's dollar 0.6 per cent down and the South African rand 0.8 per cent off.

Global markets have gone into reverse since Bloomberg said Mr Trump wanted to impose the new levies on Chinese goods as soon as public consultation ends next week. The move would add to the US$50 billion already levied.

The report follows talks last week between the world's top two economies - the first on trade since they began exchanging tit-for-tat tariffs in July - which ended with no breakthrough and will rekindle fears of a painful trade war.

"Sino-US trade developments are destined to be the defining feature of September's markets," said National Australia Bank's head of foreign-exchange strategy Ray Attrill. "We are inclined to take the headlines that Trump is minded to announce his intentions to ratchet up tariffs on China as early as next week at face value."

Mr Trump's latest comments come ahead of a November summit with Chinese President Xi Jinping, with some observers saying they are part of the tycoon's strategy to win concessions.

AGENCE FRANCE-PRESSE