The dollar and euro sank against the yen as dealers scurried into safer investments after the Fed decision, while Asian sentiment took a further blow from data showing Chinese manufacturing contracted in January.
Tokyo dived 3.33 per cent by the break, Sydney shed 1.00 per cent, Hong Kong fell 1.42 per cent and Shanghai lost 0.20 per cent. Singapore was down by 1.02 per cent, Manila by 1.37 per cent and Jakarta 1.15 per cent.
Taipei and Seoul were closed for public holidays.
Wall Street and European markets sank on Wednesday after the Fed said it would reduce its bond-buying programme by $10 billion a month to $65 billion, citing a pick-up in the US economy. The move followed a similar announcement in December.
Investors took flight after the announcement, which stoked fears of huge capital flows from emerging markets that have benefited from the Fed's cheap money policies, as dealers look for safer investments back home.
In New York the Dow dived 1.15 per cent, the S&P 500 fell 1.01 per cent and the Nasdaq shed 1.14 per cent. London, Frankfurt and Paris were all down too.
Global equity and forex markets have been in turmoil since the end of last week after a plunge in the Argentine peso sparked fresh worries about developing economies.
Anxiety about economic growth has been exacerbated by preliminary data from HSBC indicating manufacturing activity in China -- the world's second-biggest economy -- had contracted in January.
On Thursday the banking group confirmed that its purchasing managers' index for China had fallen to 49.5 this month, the lowest figure since July.
Sharp rate hikes by Turkey and South Africa on Wednesday failed to stem heavy losses in their currencies as developing economies around the world battle against foreign traders repatriating their cash.
Russia, Brazil and Argentina also faced further drops in their units, despite the International Monetary Fund stressing there was not a general panic and that each faces specific challenges.
Fed ignores emerging marketsDespite the global jitters, Fed policymakers made no mention of emerging markets, leaving investors with little comfort, analysts said.
"The market was discouraged by the fact that they did not refer to emerging economies," said Hirokazu Kabeya, senior strategist at Daiwa Securities.
Investors are "wary that authorities may be a bit too optimistic... They could have said something like they would be 'watching the situation closely'," Kabeya added.
"With that, the market atmosphere would be very different now."
In early foreign exchange trade the dollar and euro held their own against the yen compared to New York trading, although down heavily from Asian trading levels on Wednesday. The yen is considered a safe-haven investment in times of trouble.
The greenback fetched 102.22 yen compared with 102.25 yen late in New York, well down from 103.30 yen in Tokyo Wednesday. The euro sat at 139.53 yen, compared with 139.71 yen in US trade but also well down from 141.05 Wednesday.
The single currency was also at $1.3657 against $1.3662.
Emerging market currencies were also under pressure. Turkey, where political upheaval is fuelling market fears, doubled its benchmark rate to 10.0 per cent, while South Africa announced a rise of half a percentage point.
In India, rates went up a more modest quarter-point, aiming to slow inflation, itself also partly a consequence of the rupee's slump.
The moves had only a brief impact on the respective currencies. The Turkish lira jumped about 3.0 per cent to 2.17 to the dollar after the rate hike, but then shed half those gains. It was sitting at 2.2692 per dollar Thursday.
South Africa's rand was at a five-year low of 11.38 to the dollar shortly after the rate hike announcement. Although it rebounded later to 11.2976, that was still lower than the pre-rate hike rate.
"Asian markets are suffering from a double whammy - the general (emerging markets) sell-off and the Fed tapering. The more fragile currencies - the (Indonesian rupiah) and the (Indian rupee) -- are likely to be under particular pressure," Credit Agricole said.
Indonesia's rupiah weakened to 12,215 to the dollar compared with 12,160 Wednesday, although the Indian rupee firmed to 62.4075 against 62.4680.
In oil trade New York's main contract, West Texas Intermediate for March delivery, gained 29 cents to $97.65 in early Asian trading while Brent North Sea crude for March was up six cents at $107.91.
Gold, another safe-haven investment, rose to $1,262.93 at 0242 GMT, compared with $1,257.11 late Wednesday.
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