STI

EMERGING MARKETS-Thai stocks hit 3-year low, Asian FX retreat before Fed decision

Credit: REUTERS/THOMAS WHITE

By John Biju

Dec 13 (Reuters) - Most Asian currencies and stocks retreated on Wednesday, with Thai shares hitting a more than three-year low, as investors awaited updated interest rate projections from U.S. Federal Reserve officials after their final policy meeting of the year.

Stocks in Thailand .SETI fell 1.1% to hit their lowest level since Nov. 18, 2020, while those in South Korea .KS11 lost 1%.

The Philippine peso PHP=, Malaysia's ringgit MYR= and the South Korean won KRW= declined between 0.5% and 0.7%. The peso and the ringgit both hit their lowest levels since Nov. 16.

The broad focus in markets was on the Fed, which is due to announce its rate decision at the conclusion of its two-day policy meeting later on Wednesday.

Market expectations are for policymakers to keep rates on hold, but investors will be waiting to see the Fed's view on the timing of possible rate-cuts even as data overnight showed U.S. consumer prices unexpectedly rose in November.

The slightly firmer inflation readings followed data last week showing job gains accelerated in November.

"The sticky U.S. CPI data slightly dampened rate cut expectations. Against this backdrop, investors are tempted to trim their position for Fed's dovish shift tonight and risk assets in Asia dipped," Ken Cheung, chief Asia FX strategist at Mizuho Bank, said.

Investors in emerging market assets will also be watching developments in Argentina, where new Economy Minister Luis Caputo said the government will weaken the peso over 50% versus the dollar, cut energy subsidies, and cancel tenders of public works in efforts to fix the country's worst crisis in decades.

Back in Asia, data in India showed retail inflation in November rose at its fastest pace in three months, bolstering bets that the central bank will not ease interest rates anytime soon.

That contrasted with price trends in other Asian countries such as Thailand, Philippines and South Korea where data last week showed inflation cooling in November.

Jeff Ng, head of Asia macro strategy at Sumitomo Mitsui Banking Corp, wrote that due to the sizable inflation threat, central banks may not be in a rush to reduce policy rates next year.

"We anticipate modest to no policy rate cuts for many Asia central banks," he said.

Stocks in Manila .PSI fell 0.2%. The Philippine central bank's policy decision on Thursday is also on investors' radar, with expectations that the Bangko Sentral ng Pilipinas will leave interest rates unchanged.

HIGHLIGHTS:

** China should set appropriate fiscal deficit in 2024 -senior party official

** Taiwan's central bank is expected to leave its policy rate unchanged on Thursday

** S.Korea to scrap foreign registration rule for share trading from Thurs -regulator

Asia stock indexes and currencies at 0647 GMT

COUNTRY

FX RIC

FX DAILY %

FX YTD %

INDEX

STOCKS DAILY %

STOCKS YTD %

Japan

JPY=

-0.23

-10.06

.N225

0.25

26.18

China

CNY=CFXS

-0.11

-3.95

.SSEC

-0.79

-3.54

India

INR=IN

+0.00

-0.80

.NSEI

-0.56

14.83

Indonesia

IDR=

-0.16

-0.48

.JKSE

-0.51

3.48

Malaysia

MYR=

-0.49

-6.48

.KLSE

0.02

-3.21

Philippines

PHP=

-0.61

-0.32

.PSI

0.18

-4.00

S.Korea

KRW=

-0.66

-4.45

.KS11

-0.97

12.26

Singapore

SGD=

-0.19

-0.30

.STI

0.02

-4.56

Taiwan

TWD=TP

-0.04

-2.58

.TWII

0.10

23.56

Thailand

THB=TH

-0.42

-3.39

.SETI

-1.08

-18.55

Graphic: World FX rates https://tmsnrt.rs/2RBWI5E

Asian stock markets https://tmsnrt.rs/2zpUAr4

(Reporting by John Biju in Bengaluru; Editing by Shri Navaratnam and Subhranshu Sahu)

((John.Biju@thomsonreuters.com;))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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