Bernanke stuck to his plan for winding down Fed stimulus despite the recent turmoil in emerging markets. Another $10 billion will be wiped from QE. Simon Smith, Head of Research at FxPro, says it would have been more dangerous for the Fed to pander to what has been going on in EM countries, stressing that Mr Bernanke did the right thing.

SHOWS: LONDON, ENGLAND, UK (REUTERS - ACCESS ALL) (JANUARY 30, 2014)

1. FXPRO, HEAD OF RESEARCH, SIMON SMITH, SAYING:

JOURNALIST ASKING SIMON SMITH: 'It looks like the Fed is saying you know, regardless of what happens there, we're just going to motor on forward with our plans, right?'

SIMON SMITH: 'I think it would be even more dangerous if they actually halted the tapering program and bringing in the instability for markets going back to the 'will they, won't they' period we had in the latter half of last year. So I think the Fed did the right thing. Of course, they've talked about asset market bubbles in length and so have everyone else and so I think it would be more dangerous actually to hold back, pander to what's been going on in emerging markets which you can argue the degree to which that's been fueled by the Fed or is actually down to more local factors. So I think they did the right thing in continuing along that path.'

JOURNALIST: 'Okay. So how does this change your targets? We're talking, your Cable target remains the same but Yen, you revised it since the last few days?'

SIMON SMITH: 'Yeah. I mean, the- it's a trouble being a Yen bear, you're quite often disappointed. And I think that the factor along the Yen, the Yen has obviously benefited from the moves in emerging markets so that safe haven element has come back in perhaps not too strongly as this has happened two or three months ago because the Dollar itself has held up well on tapering arguments. I think on Dollar/Yen we could still nudge lower to sort of the JPY101 area. I wouldn't see us going to JPY100. On the Swiss Franc as well that has helped but I think the CHF1.20 floor on Euro/Swiss will probably contain that a bit more in terms of strength in the Yen. So we have seen that safe haven move but it's not as been exaggerated but naturally because of the Dollar and the fact that we are also seeing the Dollar benefit to a degree.'

JOURNALIST: 'Simon, it's also interesting to see that you know, looking at the charts, the Rand and the Lira as well, you know, they came back up after the shock and awe moves but basically they're selling off again now.'

SIMON SMITH: 'You know, it's- when the Central Bank raises interest rates as a means to halt currency weaknesses, I think obviously the plan was Turkey, the government was against it. There's always question, you know, investors aren't as fickle as they are, 'Okay, great, I'm giving another couple of percent,' and how you split it in Turkey is they changed the benchma rk rate is difficult. But there's always the underlying factors that are weakening it so we're not in the situations we were in 1998 and Asia 1992 in the UK when to varying degrees in Indonesia 1998, defending pegs to a degree that will seem as unsustainable 1992 Sterling in Northern ERMs. We're not in that situation where you know, pushing the gates to sort of a dam which suddenly breaks. So that is a different situation but nevertheless, I think we are going to see further weakness in those countries, probably Turkish Lira up to TRY240, Rand probably up to the ZAR175 area before we see some stabilization. But I don't think we're in the sort of depths of a full-blown emerging market crisis. It's what happens in EM countries but what I think is finally interesting is that we are seeing less discrimination so far this year in terms of both deficit countries and also surplus countries such as Hungarian Forint and also the Rouble being hit just as much as the deficit countries. That was the opposite of the case last year.'