The Korean won surged 14 per cent against the US dollar, its biggest gain since December 1997. The rate at which Asian banks lend to each other also fell, with the three-month Hong Kong interbank offered rate falling 15 basis points to 3.39 per cent, down from a peak of 4.4 per cent on October 13. The equivalent three-month rate in Singapore for borrowing in US dollars was also 15 points lower at 3.28 per cent.

Meanwhile, the cost of protecting Asian debt against default dropped sharply, suggesting that the fear of corporate collapse is receding. The price of protection for bonds of 70 of Asia's biggest non-Japanese companies sank 12 per cent, with the iTraxx Asia ex-Japan index falling to $48,833 per $1m of outstanding debt, from $55,467 on Wednesday.

The Fed agreed on Wednesday to lend $30bn (€23bn, ￡19bn) each to South Korea and Singapore as well as Brazil and Mexico. The swap line with South Korea is seen by analysts as a way of providing direct support to one of the Asian countries that has suffered most in the recent financial market turmoil.