* S.Korean won hits 13-year low, Indian rupee hits record low * Asian stocks decline on waning risk appetite * Sri Lankan sovereign dollar bond hits another record low By Harish Sridharan July 12 (Reuters) - Asia's emerging market currencies extended losses on Tuesday, with the Philippine peso slumping to a nearly 17-year trough, as a global decline in risk appetite and fresh COVID-19 curbs in China continued to weigh on sentiment. The peso declined 0.5% to hit its lowest since September 2005, while the South Korean won slid 0.7% to a near 13-year low. The Indian rupee collapsed to yet another record low against the dollar. Narrowing interest rate differentials have weighed heavily on most Asian currencies in recent months, with the peso down 10% this year. The Philippine central bank is under pressure to raise interest rates further to tame inflation, which surged to a nearly four-year high in June. "If you look at Asia Pacific in general, currencies that have been the weakest are those where policy rates have not closed the gap with inflation," said Robert Carnell, head of research for Asia Pacific at ING. The central bank recently said it was paying close attention to "strong depreciation pressures" on the peso, adding that they are prepared to raise rates by 50 basis points at its August meeting. Mounting fears of a global recession have forced investors to flee stocks and riskier Asian assets in favour of bonds and the greenback. Market view that the U.S. Federal Reserve will hike rates faster and further than its peers has contributed significantly to the dollar's unrelenting surge this year. The safe-haven currency has also been supported by worries about growth elsewhere, with China in particular implementing strict measures across multiple cities to contain fresh COVID-19 outbreaks. Rising infections in Shanghai and the discovery there of a case involving a new subvariant Omicron BA.5.2.1 have signalled the complications China faces to keep up with new mutations as it pursues its "zero-COVID" policy. China stocks were down 1%. Concerns over global economic growth led to a sell-off in Asian shares. Stocks in South Korea slipped 1.2%, while shares in Taiwan slumped as much as 2.9% to hit their lowest since December, 2020. Adding to investors' cautious approach in Seoul was Bank of Korea's monetary policy meeting on Wednesday. A Reuters poll found that the central bank is set to deliver its first-ever 50 basis point rate rise, turning up the heat on a rate-hiking campaign as inflation tops a 24-year high and has yet to peak. The won is the worst performing emerging market currency in the region this year and has lost around 10% in value against the dollar this year. "If things are going badly (in Asia), Korean won sells harder than anything else," Carnell said. Meanwhile, a sovereign dollar bond issued by Sri Lanka fell to yet another record low after the country's president and prime minister offered to resign following violent protests. HIGHLIGHTS ** Philippines May trade deficit widens to $5.7 bln ** Malaysian ringgit down 0.2%, hits lowest since March, 2020 ** Taiwan stocks hit lowest since December, 2020 Asia stock indexes and currencies at 0403 GMT COUNTRY FX RIC FX FX YTD INDEX STOCK STOCKS DAILY % S YTD % % DAILY % Japan +0.12 -16.16 -1.86 -8.60 China -0.27 -5.60 -1.01 -9.88 India -0.17 -6.59 -0.63 -7.14 Indonesia -0.15 -4.95 0.07 2.21 Malaysia -0.23 -6.11 -0.43 -9.43 Philippines -0.44 -9.43 -0.52 -10.77 S.Korea -0.69 -9.46 -1.13 -22.30 Singapore -0.05 -4.08 0.04 0.28 Taiwan -0.27 -7.39 -2.63 -23.36 Thailand -0.30 -8.05 -0.21 -6.24 (Reporting by Harish Sridharan in Bengaluru; Editing by Jacqueline Wong)
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