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(Bloomberg) -- An index of emerging-market currencies extended its decline amid broad dollar strength following the Federal Reserve’s hawkish outlook for the path of interest rates next year.

The Indonesian rupiah and Malaysian ringgit were some of the worst performers as traders priced in fewer US rate cuts in 2025. Brazil’s real bucked the trend after the central bank sold $8 billion in two spot auctions. Mexico’s peso advanced after policymakers reduced borrowing costs.

“Fed and Powell delivered the hawkish goods yesterday and markets took notice,” said Win Thin, global head of markets strategy at Brown Brothers Harriman & Co.

Fed officials reduced borrowing costs by 25 basis points on Wednesday, as expected, but struck a cautious tone over further reductions. Policymakers raised their median forecast for inflation in 2025 to 2.5% from 2.1%, and saw fewer rate reductions for the coming year.

The announcement sent risk assets plunging, a selloff that extended into Asian markets. An emerging-market equity index, heavily weighted to Asia, was down about 1.2%, the biggest daily drop in about five weeks.

The Mexican peso advanced after the central banks reduced interest rates by a quarter of a percentage point, the expectation of most in betting markets. The currency jumped as Banxico held back from a bigger cut.

“Most expected at least one board member to dissent and vote for a 50-basis-point cut. But on a second read the statement is dovish, in our view, as it anticipates a potential change in pace in future meetings,” said Carlos Capistran, chief Canada and Mexico economist at Bank of America.

Interest-rate swaps in Brazil caught a breather, with contracts due in 2029 dropping 68 basis points and the benchmark stock index rebounding as the central bank stepped into currency markets twice in the session.

Incoming Governor Gabriel Galipolo signaled it’s unlikely policymakers will change guidance for two new rate hikes of 100 basis points each, pushing back on investor bets on even steeper jumps.

Brazil’s central bank said it would offer as much as $4 billion through an FX credit line auction and as much as $3 billion in a spot auction on Friday, continuing a streak of interventions this week. The real, which had closed by the time of the announcement, finished the day up 2.4%.

Still, data showed that short interest on the iShares MSCI Brazil ETF has risen to the highest in over a year as traders fret the bleak fiscal outlook.