EMERGING MARKETS-Asian assets sink on risk aversion, Philippine peso at 17-year low

    * S.Korean won hits 13-year low, Indian rupee hits record
    * 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
    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
    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.
    ** 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
                           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)