Asian Currencies: Causalities of Europe's Debt

On Monday, Asian currencies weakened. The South Korean won and the Malaysian ringgit suffered most heavily.

The fiscal situation in the European Union deteriorated, as Standard & Poor's downgraded Italy.

The U.S. dollar rallied against the euro and the dollar index rose to multi-month highs.

Traders may have sold euros to buy dollars in a safe haven play. Perhaps they also sold Asian currencies on the same news, as there was little else that may have indicated that a dumping of Asian currencies was in order.

Traders believing that the sell-off in Asia is exaggerated may wish to consider iShares MSCI South Korea Index (NYSE: EWY). EWY attempts to return a value corresponding to the general South Korean economy and may rally after fears subside.