As money surges with ever greater force from the west into emerging markets, nowhere does fear of asset bubbles and currency volatility run deeper than in the fast-growing economies of Asia.

Foreign capital has rushed into the region’s bond and equity markets this year, driving the region’s currencies sharply higher against the dollar and raising the prospect of a sharp response from Asian policymakers.

Indeed, some governments have begun to react. Thailand on Wednesday introduced a tax on foreign holdings of government bonds, a move designed to curb potentially destabilising inflows. Other Asian countries, many of which are already intervening in the foreign exchange markets to slow the rise of their currencies, could follow Thailand’s example and impose their own capital controls in coming months.