Asia credit to survive Fed taper

The US Federal Reserve has announced its decision to cut its monthly bond purchases to $75 billion from $85 billion, suggesting that the world’s largest country is on road to recovery. But fund outflows from Asia could materialise once again although the magnitude is likely to be more subdued compared to the summer.

The $10 billion reduction comes from two areas the Fed will reduce its US Treasury purchases from $45 billion to $40 billion a month as well as its buying of mortgage-backed securities MBS from $40 billion to $35 billion a month.

The US central bank’s announcement could cause a stir in Asian markets, potentially...