Asian stocks closed firmly higher Wednesday, though off their earlier highs, after the U.S. Federal Reserve, in a joint effort with other central banks, said it would add up to $200 billion in funds to help resuscitate strained credit markets.
The move would allow financial firms to use a broader base of securities as collateral, including mortgage bonds whose value has declined as the housing bubble burst, easing concerns about a deepening credit crisis. The news triggered a rally on Wall Street on Tuesday, driving the three major indexes up over 3 percent.
This also boosted financial stocks across the region with Citigroup's Japan listing and Macquarie Group, Australia's top investment bank, both gaining over 7 percent. South Korea's Hana Financial and Singapore's OCBC were also sharply higher.
As stocks gave back some ground, the "safe haven" Japanese yen is now regaining strength against the U.S. dollar with the dollar back below the 103 level -- which suggests traders are starting to look past Wednesday's Fed action. The dollar has also weakened against the euro , prompting corresponding reactions in crude oil and gold prices.