Emerging Markets: Most Asian stocks fall, Singapore shares down almost 1.1%; forex tepid ahead of key economic data

SINGAPORE (Reuters): Most Asian currencies were subdued on Tuesday while stocks extended losses ahead of key US. and regional economic data this week that could provide clues about interest rate outlook from the Federal Reserve and other central banks.

Singapore shares fell as much as 1.1% to their lowest levels since Feb. 14, while Taiwan stocks lost as much as 1%. Indonesian stocks lost up to 0.4%, on track for their fifth consecutive session of losses, and Philippine shares retreated as much as 0.7%.

Regional currencies failed to register substantial movement as the dollar stood largely flat ahead of key U.S. economic data that could provide more information on the Fed's rate-cut trajectory.

The Indonesian rupiah and the Philippine peso inched 0.1% and 0.3% lower, respectively. The U.S. core personal consumption expenditures (PCE) price index - the Fed's preferred measure of inflation - is due on Thursday, where expectations are for a 0.4% increase on a monthly basis.

Markets have already ruled out a cut at the central bank's March meeting. In Asia, inflation data from Indonesia and Thailand are due on Friday. Data from Malaysia and Singapore last week showed that inflation had accelerated less than expected in January.

The easing inflation trend has given central banks some leeway, but investor focus remains on the timing of further rate cuts. The central banks of Indonesia and South Korea left their policy rates unchanged last week.

"While inflation is coming off, in most of the region's economies it has either just reached the target range or is still closing the gap to target range," analysts at Morgan Stanley wrote.

Meanwhile, the focus remains on the Malaysian ringgit , which is trading near lows last seen in January 1998 and which has lost nearly 4% of its value so far this year.

The ringgit rose 0.2% on Tuesday after the Malaysian central bank said the currency is undervalued and should be trading higher on account of positive economic fundamentals and prospects.

"For Malaysia, it's hard for them to raise rates at this point because growth momentum is weak and if they decide to cut with U.S. rates still high, that will only put more pressure on the currency," said Lloyd Chan, senior currency analyst at MUFG Bank.

"If you want to see sustained gain in the ringgit, we have to have the US rates decline and that will take off external pressures on the ringgit," he added. Bank Negara Malaysia (BNM) Governor Abdul Rasheed Ghaffour also said the central bank had stepped up engagements with government-linked companies, corporations and investors to encourage continuous flows into the foreign exchange market. - Reuters

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