Malaysian assets were little changed on Thursday after the central bank held interest rates steady as expected, while most other Asian equity markets edged higher on cementing bets of a U.S. rate cut this month.
Bank Negara Malaysia left its overnight policy rate unchanged at 2.75%. The ringgit lost 0.12% and Kuala Lumpur shares edged down 0.1%.
"With stable expansion of domestic consumption confirmed in second-quarter GDP, the hold was widely expected," said Ryota Abe, economist at Sumitomo Mitsui Banking Corp.
"Given Malaysia's better economic performance among Asian peers, the ringgit should gradually appreciate." The ringgit has gained 5.6% year-to-date.
Meanwhile, Taiwan stocks led gains in the region and hit a one-week high, while South Korean shares advanced for a third straight session.
Chinese stocks bucked the trend, with the Shanghai Composite down for a third consecutive session on reports that regulators might ease short-selling restrictions.
U.S. Federal Reserve Governor Christopher Waller reinforced his support for a rate cut this month, citing weakening labour market conditions. The JOLTS report released on Wednesday showed that U.S. job openings fell in July, bolstering expectations for monetary easing.
Political uncertainties in Southeast Asia's two largest economies cast a shadow over regional markets, though Mitsui Banking's Abe views these as country-specific rather than regional risks.
Indonesian authorities dismissed a police officer over the killing of a motorcycle taxi driver during anti-government protests that erupted over economic inequality and lawmakers' housing allowances.
The unrest spread nationwide after footage showed a paramilitary vehicle running over the 21-year-old driver.
The rupiah fell 0.06%, while Jakarta shares dropped 0.24%. Indonesia's central bank and government agreed on a "burden sharing" arrangement to help fund fiscal programmes.
Thailand faces its own political crisis after a court dismissed Prime Minister Paetongtarn Shinawatra on Friday. Parliament will hold a special session on September 5 to vote on a new premier, with the Bhumjaithai Party leader claiming enough votes.
The Thai baht weakened 0.14%, while Bangkok equities fell 0.29%.
Among other currencies, the South Korean won declined 0.24% and the Philippine peso gained 0.05%, while the Singapore dollar was flat. The U.S. dollar index was little changed after Wednesday's 0.2% slide.
"Currently, the region's economy hasn't been as strong as expected, causing investors to have a cautious stance on the regional currencies despite the USD softness seen," Abe said.
HIGHLIGHTS:
** Indonesian protests draw regional solidarity for delivery drivers
** Philippines targets fairer share from mining - Reuters
