It added pressure on more countries to raise interest rates to seek a halt to a major capital flight.
Fears about emerging economies intensified after the U.S. Federal Reserve withdrew more of its monetary stimulus on Wednesday and a measure of Chinese manufacturing hit a six-month low earlier on Thursday.
The benchmark MSCI emerging equity index fell 0.8 percent to a fresh 4-1/2 month low.
Large interest rate hikes from Turkey and a less-aggressive rise in South Africa on Wednesday, along with a surprise monetary tightening from India earlier this week, have failed so far to halt the sell-off in emerging assets.
If the mood spreads, further portfolio outflows would pressure growth in many emerging economies which are especially reliant on external capital, potentially setting off a vicious circle of investment outflows.
"The concern here comes with the fact that we've had major emerging central banks resort to tighter policy rates to defend their currencies, but have failed fairly miserably," said Abbas Ameli-Renani, emerging market strategist at RBS.
"In general, central banks are being forced by the turn of events, and now have their backs against the wall... We've only scratched the surface here with EM flows, and there's a lot more potential for outflows."
The Turkish lira fell more than 1 percent to 2.2810 per dollar, approaching record lows set earlier this week and fully erasing gains made after the central bank surprised the market with a whopping 425 basis point rate hike.
Local stocks lost 1.3 percent. The lira's one-month implied volatility shot above 20 percent on Wednesday, its highest in nearly 5 years.
The South African rand also ignored a surprise 50 basis point hike from the central bank on Wednesday, hitting a fresh five-year low of 11.38 per dollar. The yield on benchmark government bonds jumped 36 bps to 7.36 percent.
The pressure was expected to mount on other central banks to act to counter inflation and support their currencies, especially in Russia and Mexico.
"We are most likely only at the beginning of a global monetary tightening cycle, where the weakest are being forced to act first," SEB said in a note to clients.
Mexico's inflation has shot up well above the central bank's limit this month, prompting the bank to say earlier this week it is weighing whether monetary policy needs adjusting. The peso hit an 18-month low against the dollar last week.
The Russian rouble hit a record low of 48.21 per euro on Thursday and also fell to the lowest level since March 2009 against the dollar.
The five-year Russian government bond yield hit a 16-month high, with the yield rising 70 basis points this week alone.
Ukraine's hryvnia held steady near Wednesday's record low against the dollar while the country's government bonds fell across the board .
The fate of a $15 billion bailout package from Russia is uncertain. Russian President Vladimir Putin said the country would wait until Ukraine forms a new government before fully implementing the deal that Kiev urgently needs.
Putin left open the timing of the next aid installment while Kiev struggles to calm more than two months of turmoil since President Victor Yanukovich walked away from a treaty with the European Union.
The Hungarian forint fell 1 percent to a fresh two-year low of 312.65 per euro, extending losses made after the country's central bank surprised the market with a 15 bps rate cut last week.