Hungary no role-model for Asia despite weak FX

By Vidya Ranganathan

SINGAPORE (Reuters) - Even if Asian currencies are at multi-year lows as emerging market assets are swept down on global growth concerns, the chances regional authorities will follow Hungary with a hefty rate rise to support their foreign exchange rates are at best remote.

Two days after holding rates steady, Hungary's central bank ramped up rates by 3 percentage points on Wednesday, deciding to support its currency that was close to a record low against the euro and risk a further blow to its economy.

Asian central banks face a similar dilemma in choosing how to support their currencies without damaging economic growth.

The financial storm that has seized markets globally is deepening fears of recession in developed countries -- the main demand centres for the export engines of emerging nations and in particular Asia.

On Thursday, a rout of emerging markets globally continued.

The Indonesian rupiah hit its lowest level against the dollar in nearly 3 years. The Philippine peso dropped to its weakest level since early 2007, while the Malaysian ringgit fell to its lowest level in nearly two years.

"Asia has the highest trade/GDP exposure of any emerging market region. The direction of both monetary policy and currencies is clear - rates to be cut and currencies to weaken across the board," said Callum Henderson, head of FX strategy at Standard Chartered Bank.

Most Asian currencies have fallen less than 1 percent daily, unlike the heavily battered Brazilian real and Mexican peso, which fell 6 percent and 5.8 percent respectively on Wednesday.