Asian equity markets rebounded on Wednesday after an aggressive rate hike from the Turkish central bank soothed worries over volatility in emerging markets.
Turkey's central bank raised its overnight lending rate to 12 percent from 7.75 percent in its first emergency meeting since 2011. The move is aimed at stemming the lira's sharp declines and follows Tuesday's unexpected rate hike from the Reserve Bank of India. In reaction, the lira rose to 2.2 to the dollar from 2.253, while Dow futures spiked as much as 150 points.
"It's great news and establishes that the Turkish central bank is independent. But it doesn't make everyone feel better across emerging markets such as Argentina, which is in a very different position," said Ed Ponsi, managing director at Barchetta Capital Management.
The decision comes ahead of a Federal Reserve policy announcement later on Wednesday, where the central bank is expected to cut another $10 billion from its now $75-billion-a-month bond-buying program.