(Bloomberg) — Asian stocks and currencies are likely to slide Thursday after the Fed signaled a slower pace of rate cuts at its policy meeting, according to analysts.

The region’s sensitivity to dollar movements is likely higher given the rise in US Treasury yields, with currencies including the Korean won and Indonesian rupiah among the most vulnerable, they say. The focus will quickly shift to the Bank of Japan policy meeting due Thursday, the analysts said. 

Here’s what analysts and strategists had to say: 

Capital.Com (Kyle Rodda, a senior market analyst in Melbourne)

Asian markets are all but certain to follow the plunge on Wall Street, with the beta potentially higher because of the region’s sensitivity to the tighter financial conditions brought about by higher yields and the US Dollar. The markets won’t be able to catch their breath any time soon however, with the Bank of Japan meeting today.

Wells Fargo (Brendan McKenna, an emerging market economist and strategist in New York)

A somewhat outsized selloff across EM Asia can materialize though the region will be a little more protected than peers in Latam and EMEA. The underlying fundamentals are stronger (growth, inflation, current accounts, fiscals) local politics and institutions are more stable and central banks have more FX reserves to deploy to manage any volatility.

BNY (Bob Savage, head of markets strategy and insights in New York)

Much of the movement in US hours has been a washout of leveraged or oversized positions, such as in stocks and bitcoin. What does seem to matter to FX right now is the rates in the US making BOJ decision and yen very important to how Korean won and others trade.

USD/JPY at 155 is important just as 4.50% in 10-year US bonds is as a psychological level. I think the BOJ meeting could see further yen weakness if they are seen as not responsive to the FX weakness ris

The best currencies for holding should be Chinese yuan and Malaysian ringgit that are seeing some short covering, while Indonesian rupiah, Indian rupee, Singapore dollar and Korean won are still vulnerable to broader US dollar gains.

IG Markets (Tony Sycamore, an analyst in Sydney) 

For Asian stock markets, the combination of higher yields and the surging US dollar should see Asian markets open 1.5%-to-2% lower, with the weaker yen providing a cushion to dampen falls in the Nikkei.

Asian currencies already on the back foot are likely to see downside pressure intensify. There will be a lot of focus on USD/CNY with it edging closer to the key 7.30 level which has been defended well of late.

If the BOJ does skip the opportunity to raise rates this month, and with the January BOJ meeting clouded under the US Presidential inauguration, it means the BOJ is unlikely to raise rates until their meeting in March. This would be a dire outcome for the JPY, with the potential to send it cascading back to 160 per dollar.

–With assistance from Georgina McKay.

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