The South Korean won and the Turkish lira were the main casualties on Thursday as the turmoil on financial markets deepened, provoking violent price swings in emerging market currencies.

The turmoil on global asset markets has prompted an upturn in foreign exchange volatility, with evidence that the volatility in the major currencies had diminished, but had been replaced by a worrying upturn in volatility in currencies of some of the less developed countries.

Analysts said emerging market currencies were being hit as foreign investors pulled money out of developing regions, not only because of liquidity pressures prompted by the credit crisis but also because of growing fears over a slowdown in global growth.

"There seems little now that the authorities can do to reverse the process of deleveraging that is taking place with financial institutions all contracting their balance sheets at the same time," said Derek Halpenny at Bank of Tokyo-Mitsubishi.

Analysts said indebted emerging market currencies with high deficits were likely to remain in focus.

"The story is all about the liability side of balance sheets in the context of weakening global funding conditions," said Hans Redeker at BNP Paribas. "Countries in need of foreign funding will see their currencies weakening regardless of domestic fundamentals."

The South Korean won plummeted 10.9 per cent to Won1,372.30 against the dollar, while the Turkish lira dropped 2.8 per cent to TL1.4772.

Meanwhile, the South African rand recovered to stand up 7.2 per cent at R9.9650 against the dollar, having plunged as much as 18 per cent in volatile trade overnight.

The Hungarian forint, which tumbled on Wednesday amid fears over the country's ability to finance its large external deficit, recovered some ground, rising 2.7 per cent to Ft263.65 against the euro and climbing 2.6 per cent to Ft196.06 against the dollar.

In comparison, price action among major currencies was relatively muted , with the dollar standing flat at $1.3472 against the euro, easing 0.4 per cent to $1.7223 against the pound but rising 0.4 per cent to Y100.20 against the yen.