(Dec 18): The Thai baht extended its decline while the Indonesian rupiah pared losses after their respective central banks held rates steady as expected on Wednesday, while regional stock markets were mixed as investors braced for the US central bank policy.

The rupiah was last down 0.2%, and stocks in Jakarta retreated 0.4% after Bank Indonesia (BI) held its main interest rate steady at 6%.

The Thai baht was down 0.4% and stocks gained slightly after the central bank decision, last up 0.2%.

All eyes are on the Federal Reserve, which is widely expected to deliver a 25-basis-point interest rate cut on Wednesday, but the focus will be on the extent of rate reductions projected for 2025.

A slower pace of US rate cuts would boost the dollar, putting further pressure on emerging Asian assets while quicker rate cuts would see Asian FX gain some footing.

"Worst case scenario for EM assets would be the Fed decides to hold the policy rate, upgrades the economic outlook and reduce the number of rate cuts vs the September Dot plot," Krung Thai Bank's Poon Panichpibool said.

In Indonesia, the central bank had cut interest rates in September, but has since held them steady to prioritise stabilising the rupiah which has been under pressure as the US dollar strengthened.

The rupiah slipped to a four-month low of 16,120 earlier in the session.   

"Going ahead whether BI (will be) able to cut interest rate or not will depend on the capital flows," Trimegah Securities analyst Fakhrul Fulvian said.

Capital flows for Indonesia will rise if the government is willing to add more global bonds to its funding, the analyst added.

Elsewhere in the region, the Singapore dollar, Philippine peso and the Malaysian ringgit all traded flat against a broadly stable US dollar.

Equities were broadly mixed with South Korean stocks gaining 1.1% on dip-buying after two sessions of declines. Singapore stocks retreated 0.4% and those in the Philippines fell 0.5%.

MSCI's broadest index of Asia-Pacific shares outside Japan traded near a two-week low.

Uploaded by Magessan Varatharaja