BANGKOK (Reuters): Asian equities fell and the Indonesian rupiah and the Thai baht led losses among currencies on Tuesday, as caution prevailed ahead of key central bank decisions this week, including a widely expected interest rate cut from the US Federal Reserve.
Shares in Manila fell for the fifth consecutive session, falling 2.3% to their lowest since early August. Equities in Jakarta and Shanghai declined by 0.9% and 0.7%, respectively.
In currencies both the Thai baht and the Indonesian rupiah declined 0.4%.
The rupiah has fallen beyond the psychologically important threshold of 16,000 per U.S. dollar, which may impact Bank Indonesia's (BI) monetary policy decision on Dec. 18, when interest rates are expected to remain unchanged.
The rupiah logged its fifth straight session of decline and has fallen more than 6% from its September peak despite central bank intervention last week.
The dollar index held firm on Tuesday near recent peaks, on the eve of an expected 25 basis point interest rate cut in the United States, as traders ratchet long-term rate assumptions higher.
OCBC currency strategist Christopher Wong said if the Fed hints at two or fewer cuts in 2025, markets would read it as "hawkish" and thus strengthen the greenback.
However, if the Fed sees three cuts next year, it would ease some pressure off emerging market currencies.
On Dec 19, the Bank of Japan is expected to hold current interest rates, shifting from earlier market expectations of a rate hike before year-end. The Japanese yen ended its six-day decline with a modest gain.
Central banks in Thailand and the Philippines are also scheduled to announce their monetary policy decisions this week.
Bank of Thailand is widely expected to keep its rates steady on Dec. 18, while the Bangko Sentral ng Pilipinas is set to cut rates for a third consecutive time on Thursday, with further cuts expected in 2025.
The peso gained as much as 0.2%. Investors also assessed the mixed Chinese economic data released on Monday as China's retail sales grew at its slowest pace in three months, underwhelming the market and highlighting the need for more stimulus ahead of potential US trade tariffs. - Reuters
