Singapore: India's rupee and Malaysia's ringgit led Asian currencies lower last week as lingering concern about Greece's ability to tackle its deficit crisis curbed demand for emerging-market assets.

The Dollar Index traded on ICE Futures in New York headed for the best week since January as investors sought the relative safety of the greenback. Asian currency losses were tempered by reports in Taiwan and Thailand showing a recovery in exports is gaining traction, while the International Monetary Fund said the region will lead global economic growth this year.

"The key issue is concern that the Greece developments could trigger another round of global deleveraging, although it is very remote at this stage," said Enrico Tanuwidjaja, a regional economist at OSK-DMG group in Singapore. "But Asian sentiment is positive."

India's rupee fell 0.4 per cent last week to 44.5263 per dollar in Singapore. The ringgit declined 0.4 per cent to 3.2055, while Thailand's baht dropped 0.1 per cent to 32.28.

The ringgit headed for a second week of losses after Greece's credit-rating was downgraded. The euro dropped toward its lowest level in a year against the dollar after the European Union raised its estimate for the Greek deficit and Moody's Investors Service cut the rating.

Greece began talks last week on activating an emergency-aid package, and the IMF called the country's fiscal crisis a "wake-up call" on sovereign-debt risks. The Mediterranean nation's deficit was 13.6 per cent of gross domestic product last year, higher than the government's April 7 forecast of 12.9 per cent, the EU's statistics office said. The EU forecast a shortfall of 12.7 per cent in November.

The ringgit's decline may be limited as the Group of 20 nations seek to step up pressure on China to let the yuan appreciate, said Tan Voon Ching at OSK Investment Bank Bhd.

"Greece is causing the market to buy back the dollar, and that's slowing the momentum in the ringgit appreciation," said Tan, a currency trader.

  • 0.4%  fall in Indian rupee last week against the dollar
  • 13.6% Greek's deficit recorded last year