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 per cent to hit their lowest level since November 18, 2020, while those in South Korea lost 1 per cent.

The Philippine peso, Malaysia’s ringgit and the South Korean won declined between 0.5 per cent and 0.7 per cent. The peso and the ringgit both hit their lowest levels since November 16. 

The broad focus in markets was on the Federal Reserve, 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 Federal Reserve’s view on the timing of possible rate-cuts even as data overnight showed the US consumer prices unexpectedly rising 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,” said Ken Cheung, Chief Asia FX strategist at Mizuho Bank.

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 per cent 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 rising in November at its fastest pace in three months, bolstering bets that the central bank will not ease interest rates anytime soon. 

This contrasted with price trends in other Asian nations 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 Asian central banks,” he said.

Stocks in Manila fell 0.2 per cent. 

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.