THE sell-off of the Hong Kong dollar and other Asian currencies aptly shows the vulnerability of Asia's dragons to Western jitters. Despite the evident economic success - booming economies, high foreign reserves, high growth in gross domestic product - one Mexico is enough to sour experienced investors on emerging markets the world over. Hong Kong's currency losses are particularly hard to fathom. Why, when every HK$7.8 in circulation is matched by US$1 in reserves, do speculators believe they face currency risk? And why, when China is soundly behind Hong Kong's currency and the Bank of China is issuing Hong Kong dollars, do investors doubt Beijing's commitment to the territory's legal tender? Hong Kong is a long way removed from the nervous days of 1983 when investors had reason to worry about what would happen with China when British tenure in the territory ended. It has a strong economic track record, and has been firmly, but gently, integrated with what is fast becoming a giant economy. Admittedly, the property market is casting a dampener over the stock market. But Hong Kong exemplifies many of the strengths that are helping other countries in the region rapidly industrialise and modernise. No one seriously doubts that the long-term direction of Asian dragons and newly-industrialising economies is up. Late last year, delegates to a series of conferences in Hong Kong argued strongly that the regional currencies were generally undervalued. They said Western investors should invest in Asian currencies to benefit from capital gains as the currencies benefited from higher credit ratings, strong economic growth, diminishing debt and surging exports. Some of those same commentators must have looked on awestruck at yesterday's sell-off. Hopefully at least one of them will put his money where his mouth is and hunt around for bargains. Starting with Hong Kong.