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Asian Stocks Tumble, Currencies Weaken on Fed's Hawkish Shift

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Emerging Asian stocks sank to multi-month lows and currencies weakened against a surging dollar on Thursday after the U.S. Federal Reserve signaled a slower pace of rate cuts in the coming year. The Fed's hawkish tilt, despite a widely anticipated rate cut, spurred traders to cut back expectations for further easing and propelled the dollar to a near two-year high. The MSCI index of international emerging markets equities declined as much as 1.6%, while MSCI's emerging markets currency index fell 0.5% to its lowest level in over four months. Several Asian currencies, including the South Korean won, Indian rupee, Malaysian ringgit, and Indonesian rupiah, experienced significant drops against the dollar. Central banks in Indonesia, Thailand, and India took steps to stabilize their respective currencies.

Emerging Asian stocks tumbled to multi-month lows on Thursday while currencies weakened against a strong dollar, as risk aversion prevailed after the U.S. Federal Reserve signalled a slower pace of rate cuts in the coming year.

The hawkish tilt from the Fed sent traders heavily dialling back easing expectations next year and pushed the dollar to a near two-year peak. The Indian rupee declined past 85 to the U.S. dollar for the first time, while the Malaysian ringgit retreated 0.8%.

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