The U.S. dollar stood at its highest in two weeks against a basket of currencies early on Friday, having made a decisive move a day after the Federal Reserve delivered a long-awaited hike in interest rates.
MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS rose 1.5 percent.
The Brazilian real has declined 46.17 percent year-to-date, according to Thomson Reuters data, and is expected to keep falling through 2016. "There has been a steady bleed out of assets and no one is certain what shape the market might be in this time next week".
"As U.S. liquidity growth continues to slow, those emerging market countries and corporations that are reliant on U.S. dollar capital inflows for funding that have not undertaken the necessary structural reforms will be unable to continue to finance themselves, let alone repay the considerable amounts of U.S. dollar debt that they have accumulated post-financial crisis", said Atul Lele, chief investment officer at Deltec International Group.
"Or whether the USA, via a strong dollar, will simply become the latest victim of the deflationary "pass the parcel" which has plagued the global economy for a decade and find itself following all of the other developed market central banks which raised rates but soon found they had to reverse course".
Also, US housing starts in November rebounded from a seven-month low and permits surged to a five-month high, signs of strength in the economy as the Federal Reserve starts raising interest rates after years of easy monetary policy.
With a hike seen as a mostly done deal after more than a year of anticipation, investor focus is fixed on how the Fed might opt to pace its tightening cycle next year.
"But I'm pretty sure too that Janet Yellen is going to use the word gradual (in reference to possible pace of future hikes) quite a few times during the press conference". "No one can be confident how the dollar will emerge from all this but volatility seems assured", wrote Sean Callow, a senior strategist at Westpac.
The local currency gained to 94.12 Australian cents from 93.72 cents yesterday, slipped to 82.29 yen from 82.40 yen, dropped to 4.3450 yuan from 4.3588 yuan, and was little changed at 62.03 euro cents from 62.04 cents.
The dollar was steady at 121.70 yen, pulling further away from a six-week trough of 120.35 struck Monday.
Analysts said some traders' surprise that the Fed's rate forecasts were not reduced continued to support the dollar.
Brent crude LCOc1 fell more than 3 percent on Wednesday, after USA government data showed a big build in crude inventories.
The U.S. currency climbed 1 percent on Thursday.DXY, its biggest rise in over a month and a trajectory which, if it continues, has serious implications for already highly stressed emerging markets, commodities and high-yield bonds.
Commodity currencies were hardest hit as the firmer greenback took a toll on a range of commodities from oil to base metals and gold.
