Policymakers from Brazil to South Korea and China on Thursday pledged to come up with fresh measures to curb capital inflows after the US Federal Reserve said it would print billions of dollars to rescue the economy.   

The frosty reaction from emerging economies makes any substantive deal on global imbalances and currencies at next week's Group of 20 meeting that Seoul is hosting even less likely.

South Korea's Ministry of Finance and Strategy sent "a message to the markets" on Thursday saying it would "aggressively" consider controls on capital flows while Brazil's Foreign Trade Secretary said the Fed's move could cause "retaliatory measures"    
The United States had wanted to use the G20, which groups developed and emerging market economies that account of 85 percent of global output, to agree firm numerical targets for current account balances and to reiterate a commitment not to undertake competitive devaluations.   

"It doesn't seem to me that this is the kind of environment in which any country will commit to targets," said Credit Suisse currency strategist Olivier Desbarres.   

"Why would the world's leaders come up with a much, much more prescriptive framework than that agreed by their finance ministers two weeks ago."    

In the wake of the Fed's move to buy $600 billion of US
bonds, South Korea's central bank was seen selling its won currency on Thursday in a bid to cap gains after it hit six-month highs in the run-up to the Fed announcement.

Other high-yielding currencies also rose with the Australian dollar breaking through $1 to its highest levels since 1982. In public, South Korean officials remained optimistic of a meaningful deal from the G20 but in private optimism of a pact backed by firm numbers has been tempered by opposition from Germany and China.   

"It's very difficult to say that we will have numbers (out of the summit)," said a South Korean official who declined to be named but who had direct knowledge of the talks.   

Chinese officials were more blunt in their assessment of the G20 process and appeared to dispute claims by South Korean officials that the group's emphasis on a wide range of economic indicators, not just currencies, had been beneficial.   

Chinese central bank advisor Xia Bin said in a commentary piece in the Financial News, a Chinese-language newspaper managed by the bank, that "We must think 'what is good for us'."    

Seoul has held off announcing controls on capital flows for fear of embarrassment ahead of the G20, but others who will participate have been less shy.

Emerging market powerhouse Brazil has announced a slew of measures over the past few weeks to curb the appreciation of the real currency by direct intervention in markets and doubling a tax on portfolio inflows.

"Looking more closely at the pattern of gaps between the tracking and the actual foreign exchange rate, one may find evidence of a small effect," Brazilian investment bank BTG Pactual said in a detailed study of the impact of measures taken.

"But it is exactly because the effect is indeed small - a couple of centavos in the Brazilian real price of one US dollar - both in absolute terms and in relation to the overall fluctuations of the currency, that it does not stand out in the more cursory comparison between the tracking and the actual FX rate," it concluded.  - Reuters