The notion that markets will return to 'normal' this year is pure fiction, one analyst told CNBC on Thursday, noting weaker emerging markets are still vulnerable to volatility stemming from the Federal Reserve's monetary policy.
Emerging markets came back into the spotlight in recent weeks, after steep drops in the currencies of countries like Argentina, Turkey, Brazil and South Africa - all of which have current account deficits - reminded investors how vulnerable they can be to worries over a reduction in the Fed's asset-purchase program.
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Axel Merk, chief investment officer of Merk Investments, told CNBC that Fed members have been acting confused, and a lack of clarity in policy direction would continue to hurt the more vulnerable emerging markets this year.
"Fed policy is going to be volatile and the key implication from that is that it's poison for emerging markets, because the volatility is bad for markets with little liquidity," said Merk.
Emerging markets - which have been one of the biggest beneficiaries of quantitative easing - were hit particularly hard last year when talk of 'tapering' first started to panic investors, and countries with higher current account deficits saw vicious selloffs as a result.
The Fed eventually began its taper in December when it reduced asset purchases by $10 billion, a move it repeated at its January meeting. Although many analysts now believe the end of quantitative easing (QE) has been priced in, other commentators, including Philadelphia Fed President Charlie Plosser, suggested Fed policy could still catch people off guard.
(Read more: Emerging markets-Is it time to bottom fish? )
In a speech made in Rochester, New York on Wednesday, Plosser said the current levels of tapering could prove insufficient if the economy keeps growing at its current pace, and said the Fed may be forced to scale back asset purchases faster, by mid-2014.
Merk told CNBC he was concerned Fed policy makers did not have a strong handle on things.
"The Fed is transparently confused, they don't have a clue what's going on and the reason they don't have a clue is because they have taken away their gauges," he said, referring to how QE has distorted the bond markets, making it difficult to analyze inflation expectations.
Furthermore, the market hasn't yet priced in the new Fed chair Janet Yellen's dovish viewpoint, said Merk, and could be surprised when she makes a U-turn in both the bank's communication style and policy, though he believes it will be a while before any policy reversal does happen.