Leaders of the "BRICS" bloc of nations - Brazil, Russia, India, China and South Africa - have agreed to set up a $100 billion fund to protect their economies from financial instability.
The move comes in the wake of economic slumps in India and China as a result of investors withdrawing money from emerging markets and betting on the US which is drawing back its economic stimulus programme.
The Brics leaders said the details of the fund were still being worked out.
"The initiative to establish a Brics currency reserve pool is at its final stage," Russian President Vladimir Putin said during the G20 summit in St Petersburg.
"Its capital volume has been agreed at $100bn," he added.
The chairman of the US Federal Reserve, Ben Bernanke, said in May that the US might start to rein back on its $85bn-a-month bond-buying programme paving the way for investors looking for higher returns to return to the US.
That in turn has hit Asian currencies hard with the Indian Rupee depreciating by more than 20% this year. The Brazilian real has weakened by more than 15% whilst the Russian Rouble has dropped 8% in value since May.
The US stimulus programme was introduced with the aim of increasing liquidity in the markets after the global financial crisis. Part of the increased cash has flowed into emerging markets, helping to lift asset prices there.
But Mr Bernanke's statement, coupled with a recovery in the US economy, has seen investors pull out money from these economies.
They have been rushing to buy dollars in anticipation of higher returns.
The latest move to establish the fund is being seen an attempt by Brics nations to tackle any potential volatile movements in their currencies.
China will contribute $41bn to the pool, with Brazil, India and Russia putting in $18bn each and South Africa $5bn.
Earlier this year, Brics nations discussed the formation of a new development bank to fund infrastructure and development projects throughout the developing nations.BLOG COMMENTS POWERED BY DISQUS