Russia was forced to ramp up interest rates on Tuesday in a desperate attempt to rescue its rouble while factory activity in China shrank for the first time in seven months, marking an increasingly turbulent end to the year for the global economy.
The relentless slide in oil prices, while a blessing to most rich world consumers, is becoming a curse for countries reliant on resource exports. Indonesia became the latest Asian casualty on Tuesday as its currency caved to fresh 16-year lows.
Russia had to take drastic action to defend its currency, raising interest rates by no less than 5.5 percentage points to 17 per cent in a shock midnight manoeuvre.
"This should make it more difficult to short (the rouble)," said Jorge Mariscal, chief investment officer for emerging markets at UBS Wealth Management in New York.
"I think it shows they are really concerned about the speed of the decline."
Russia's economy still depends in large measure on sales of oil and gas, which account for about two-thirds of exports.
The hike in rates bought some time for the currency in Asia, with the dollar falling back to 61.50 roubles on dealing platform EBS, from atop 67.00 at one point. All eyes were now on the start of Russian trading to see if the relief lasted.
Concerns about possible capital flight were spreading through other emerging markets, with the Indonesian rupiah falling sharply for the third straight session.
The mood in Asia was hardly helped when a measure of Chinese manufacturing activity for HSBC/Markit fell to 49.5 in December from November's 50.0, adding to pressure for further stimulus.
"The manufacturing slowdown points to a weak ending for 2014," said Hongbin Qu, chief economist for China at HSBC.
"The rising disinflationary pressures, which fundamentally reflect weak demand, warrant further monetary easing in the coming months."
Worries about disinflation, and whether it could morph into outright deflation, have spread world wide as oil prices notched up new lows. Brent crude fetched just $60.81 a barrel on Tuesday, having almost halved in price since June.
The risks are such that investors are wagering the US Federal Reserve might go slow on policy tightening next year even if its economy continues to outperform.
The central bank starts a two-day meeting later on Tuesday and there is intense speculation on whether it will drop a commitment to keeping rates near zero for a "considerable time."