Asian shares plummeted in trading today. Fears of a credit crunch in China, the growing possibility of more tapering in the US and the continuation of a full-scale flight from emerging markets on the back of political problems in Argentina, Ukraine and Turkey.
Japan's Nikkei share average abandoned the 15,000-level, tumbling 2.5 percent - a two-month low. MSCI's broadest index of Asia-Pacific shares outside Japan dropped 1.5 percent to four-and-a-half month low, having lost more than one percent on Friday.
Hong Kong's Hang Seng Index shed 2.1 percent to a five-month low. The broader Topix took an even bigger hit, falling 2.8 per cent - its worst decline since August.
And the Philippine peso and Malaysian ringgit both fell to their lowest levels since 2010.
Investors have sought refuge from volatile markets in the dollar, the traditional haven gold, and the yen.
Gold rallied for the third session in a row in Monday trading to a new two-month high. Spot gold crept up to $1,268.90 an ounce, after rising as high as $1,278.01.
The yen lost 0.15 per cent to 102.45 on Monday - although it has strengthened more than two per cent to a seven-week high in the past two sessions. The dollar and the euro have been edging back up against the yen after slipping to two-month lows against the Japanese currency.
But while Japan isn’t overly vulnerable to capital outflows like India and Indonesia are, the yen’s strength may not be lasting.
Marshall Gittler, head of global FX strategy at Iron FX stresses that the “fundamentally weak trading position of Japan” will likely undermine the yen over the longer term.
Data in overnight showed that the country’s trade deficit in December was narrower than expected, but this was probably owing to imports being lower than anticipated - exports also missed expectations. And while imports have now reached pre-crisis levels, exports are still only at 81 per cent of their peak.