The won ended onshore trading at 1,091.4 per dollar on Tuesday, the strongest since March 8, marking its third consecutive day of gains. Although there were no signs of any major action by local financial authorities, traders are becoming more cautious as the stronger won raises the prospect of intervention.

Over the past three weeks the renminbi has gained 0.6 per cent against the dollar, an unusually fast rise for the tightly controlled Chinese currency and one that has come even as the dollar has been relatively strong.

By Jake Maxwell Watts and Gwen Robinson in Bangkok

The heated debate in Thailand about whether the central bank should intervene to stem the biggest rise in the baht in 16 years intensified this week as a survey of Thai companies revealed that almost 10 per cent of entrepreneurs claim they would go out of business if the baht rose further to 27.90 to the dollar.

Thailand’s currency was hovering around 28.90 to the dollar on Thursday, down from 28.56 last week, but still nearly 6 per cent higher than at the beginning of the year. The baht’s steady appreciation has been largely driven by inflows of foreign capital seeking strong returns from Thailand’s booming economy and exiting Japan.

The baht touched 28.93 to the dollar at one point, before weakening to just over 29. It’s a worry for policy makers, who have seen the baht appreciate by over 5 per cent already this year alone, but who don’t seem to have a lot of options.

Having spent nearly $5bn last year buying dollars to stem the peso’s rise, the government this week said it was willing to deploy double the amount – or $10bn – this year keep the currency in check.

The bank says that the “case for EM assets is becoming more challenging” as equities have disappointed while in fixed income expected returns have fallen and the risks have risen.

But don’t give up, says the bank in a report published this week. Look for opportunities in “idiosyncratic factors” in specific markets.

Adding to the gloom was a warning that Orbán’s latest round of constitutional amendments, due to be voted on in parliament on Monday, may contravene European Union law.

Beppe Grillo

The uncertainty surrounding the Italian election result has upset investors around the globe, not least in emerging markets. While Beppe Grillo, the comedian whose movement won 25 per cent of the vote, may be laughing, fund managers are not.

Following losses on Wall Street, the MSCI Asia ex-Japan index fell 1.2 per cent on Tuesday. Closer to Rome, the impact was bigger, with the MSCI East Europe index down 1.9 per cent in early trading. Watch out for a nervous day.

Not likely.

Policy makers have faced those fears in different ways. Munir Jalil and Jose Vicente Romero of Citi Research argue that Colombia has turned to some fancy accounting.

There had been expectations that the central bank might cut rates to boost economic growth and help curb the won’s appreciation against the dollar and the yen. But Kim Choong-soo, BoK governor, said interest rates were already accommodative and, in any event, there was no clear relationship between interest rates and exchange rates in Korea.

Well, with Japan’s new aggressive monetary stance, it’s back (in a way). And that should force EM currencies to appreciate, as before, shouldn’t it?

Perhaps not, according to Bhanu Banweja of UBS.

It came as the Czech National Bank kept its ultra-low rate of 0.05 per cent in place, with growing speculation that the Czechs will start to intervene on foreign currency markets to lower the koruna in a bid to boost the economy.

The forint has got the wobbles again. A report that Hungary’s economy minister Gyorgy Matolcsy had been picked to succeed central bank governor Andras Simor, who steps down on March 6, sent the HUF tumbling by as much as 3 per cent against the euro on Tuesday.

A swift denial had the currency recovering rapidly and on Wednesday it was flat in nervous trading. But it’s clear that Matolcsy’s names scares investors – and even though he is the bookies’ favourite, his nomination isn’t yet priced into the market.

Foreign investors are selling out of South Korea as the stronger won threatens to cut earnings of major exporters. Although global funds are flowing into emerging markets amid higher risk appetite triggered by signs of economic recovery in the US and China, South Korea is bucking the trend as the won’s strength allows foreign investors to take profits from Korean securities.

Overall, foreign investors sold a net Won2.84tn ($2.6bn) of Korean securities last month, the biggest monthly figure since December 2011.