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Several emerging market currencies in Asia hit 2009 highs on Friday, but the rally on the back of surging stocks may soon hit a roadblock made up by doubts about the stamina of any global economic recovery.

Foreign investors have flocked to put money into regional equities and bonds, encouraged by signs the global downturn may be bottoming out following the most severe crisis in decades.

But caution is the watch-word as markets try to determine if the rebound seen so far reflects sustainable demand or a rush of orders to replenish stocks depleted during the downturn.

The outcome is critical for Asia because it relies heavily on trade earnings, which can drive up currencies over the longer-term.

“Economic expectations are stabilizing, although we may still have many more months of volatility,” said Callum Henderson, chief global currency strategist at Standard Chartered Bank in Singapore.

On Friday, the Indonesian rupiah hit its highest level since October. Thai baht, India rupee and Taiwan dollar are trading at 2009 highs and the Singapore dollar and the Malaysian ringgit are their strongest since January. But analysts suspect the rally will fade.

“While the region’s balance of payments have begun to right themselves, they are not yet strong enough to generate a sustainable rally for the Asia ex-Japan currency bloc,” said Stewart Newnham, a strategist at Morgan Stanley in Hong Kong, said in a client note.

The currencies tracked the rise in regional stocks, making them vulnerable if fickle investors start to doubt the strength of the global recovery and sell off equities again 24 hour payday advances.

RUPIAH, WON, PESO

After dumping a net $14 billion in stocks across South Korea, Taiwan, Indonesia, India and Thailand, and the Philippines in the last three months of 2008, investors have bought back $16.8 billion since early March, Nomura figures show.

The helped the MSCI index of Asia Pacific stocks outside Japan rally as much as 50 percent.

A positive daily correlation with the index over the past year of between 0.88 and 0.95 percent suggest the Korea won, rupiah and to a lesser extent the Philippines peso are the most exposed currencies in emerging Asia to a stocks sell off.

Newnham picked out both the Singapore dollar and rupiah as having limited scope to advance since they are now trading well above their 1990-2008 averages, suggesting their values are stretched.

The Singapore dollar is the most dependent economy in Asia on exports, which generate the equivalent of 190 percent of its GDP, so it’s outlook relies on the direction of global trade.

The rupiah has long been one of Asia’s most volatile currencies. High interest rates attract a wave of investment when risk appetite grows, but equally the currency is hit hard when risk concerns rise. 

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