By Malcolm Morrison TORONTO _ The Canadian dollar maintained a modest gain Wednesday as traders weighed the effect of measures by emerging market countries to protect their currencies. Traders also awaited a mid-afternoon announcement by the U.S. Federal Reserve that will likely clarify what the central bank will do to further wrap up its key stimulus program. The loonie gained 0.1 of a cent to 89.74 cents US after closing at a fresh 4 1/2 year low on Tuesday. It had ran as high as 90.06 cents US during the morning amid short-lived relief after several central banks in emerging-market countries moved to shore up their currencies. Nerves were initially smoothed by the Turkish central bank's aggressive interest rate hike to stabilize its currency, another rate hike in India and China's injection of funds into its banking system. But the Turkish lira gave up initial gains from the central bank's move, while a surprise move by South Africa's central bank also provided only short-term strengthen to its currency. Currencies have been volatile since last week after Chinese data showed a contraction in manufacturing. Currencies in emerging markets are also under pressure as investors wonder how they'll be affected by the U.S. Federal Reserve's removal of monetary stimulus. The Russian currency was at a five year low against the U.S. dollar. The Fed's massive bond purchases over the last few years has resulted in a stream of cheap money into other countries. But now the U.S. central bank is cutting back stimulus, the U.S. dollar has strengthened on expectations of higher interest rates and a stronger economy. The Russian currency was at a five year low against the U.S. dollar. "Emerging markets remain under pressure (and) fears of contagion remain," observed Rahim Madhavji at Knightsbridge Foreign Exchange. Meanwhile, the Fed is widely expected to announce later in the day it will further cut its monthly purchase of bonds, a move that had kept long term rates low and encouraged a rally on stock markets. The Fed has already tapered its asset purchases by $10 billion a month to $75 billion and is expected to announce it is trimming by a further $10 billion a month. On the commodity markets March crude on the New York Mercantile Exchange slipped 27 cents to US$97.14 a barrel. March copper was a cent lower at US$3.24 a pound while February gold rose $13.90 to US$1,264.70 an ounce.
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