BENGALURU: 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 US Federal Reserve officials after their final policy meeting of the year.
Stocks in Thailand fell 1.1% to hit their lowest level since Nov. 18, 2020, while those in South Korea lost 1%.
The Philippine peso, Malaysia’s ringgit and the South Korean won 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 US consumer prices unexpectedly rose in November.
The slightly firmer inflation readings followed data last week showing job gains accelerated in November.
“The sticky US 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.
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