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Hong Kong - Asian markets rallied on Thursday and the dollar held its New York gains after the US Federal Reserve said it would start cutting its stimulus programme next month, in a sign of confidence in the country's economic recovery.
The announcement that it will whittle down its $85bn a month scheme while keeping interest rates at record lows sent US shares surging to new highs.
Tokyo jumped 1.60% by the break, Hong Kong rose 1.03%, Sydney added 1.11%, Shanghai gained 0.12% and Seoul was 0.63% higher.
Even shares in emerging markets - which have seen huge investment inflows thanks to the cheap cash made available by the stimulus - were higher, with Manila adding 1.32% and Jakarta up 0.76%.
After months of speculation, the Fed on Wednesday eventually said it would reduce its bond-buying by a modest $10bn from next month, citing a string of upbeat data indicating the world's number one economy is strengthening.
"In light of the cumulative progress toward maximum employment and the improvement in the outlook for labour market conditions, the committee decided to modestly reduce the pace of its asset purchases," the bank's policy committee said in a statement.
It added that it would likely take "further measured steps at future meetings" if the economy continues to improve.
Policymakers also said they would keep interest rates at record lows "well past the time" that the unemployment rate declines below 6.5% -- its previous cut-off point before tightening monetary policy.
While global markets have been sinking over the past week on expectations of a taper, the relatively small reduction, together with the likelihood of interest rates being kept ultra-low, provided a boost.
"By putting more conditions on its first increase in short-term interest rates, the Fed shifted market expectations for this from mid-2015 to later that year or possibly early 2016. This should put downward pressure on long-term rates," Ryan Sweet of Moody's Analytics said.
The Dow soared 1.84% and the S&P 500 jumped 1.66%, both hitting new records, while the Nasdaq rose 1.15%t.
Edward Fung, investment advisory head at Kim Eng Securities in Hong Kong, told Dow Jones Newswires: "From how the US market reacted, it seems to me that $10 billion tapering is nothing to investors compared to the Fed's commitment to hold interest rates at a low level."
On currency markets the dollar rallied, hitting new five-year highs in New York after the Fed announcement, peaking at ¥104.36 at one point - up from levels below ¥103 earlier in Tokyo - before settling at ¥104.13. In early Japanese trade Thursday it fetched ¥104.00.
The US unit also jumped against the euro. The single currency bought $1.3685 Thursday, against $1.3680 in New York, but was down from the $1.3770 mark in Tokyo Wednesday. The euro was also at ¥142.51 compared with ¥142.56 yen.
And the Australian dollar sank to 88.21 US cents, from 89.04c on Wednesday.
The greenback generally benefits from tighter US monetary policy as it means fewer dollars flowing around the financial system, which in turn increases demand.
Oil prices slipped, with New York's main contract, West Texas Intermediate for January delivery, down 15 cents at $97.65 and Brent North Sea crude for February falling 34c to $109.29.
Gold fetched $1 220.86 at 02:00 GMT compared with $1 232.79 late on Wednesday.
