Stocks across Asia declined on Wednesday, tracking losses on Wall Street, while currencies edged up against a slightly weaker dollar as investors turned their attention to the US Federal Reserve’s interest rate decision.

Shares in Jakarta, Seoul and Singapore fell 0.9% to 1.2%. Markets in China and Japan were closed for holidays.

“We are seeing some spillover in Asia from overnight losses on Wall Street as US banking contagion risks linger,” said Christopher Wong, currency strategist at OCBC.

Major US stock indexes sank overnight on renewed fears over the financial system. The United States has seen three mid-sized bank failures so far this year, with First Republic Bank’s assets seized by regulators and sold to JPMorgan late on Monday.

Late on Wednesday, the US Federal Reserve is expected to deliver a 25 basis points hike, and investors are anxious for any signals from the central bank on whether it will be the last hike for now, or if further increases are possible if inflation remains high.

In Asia, several regional central banks have already hit pause on interest rate hikes.

And the Bank Negara Malaysia is likely to keep its key interest rate unchanged at 2.75% for a third consecutive meeting later on Wednesday.

Stocks in Kuala Lumpur were weaker and the ringgit inched lower. The Malaysian currency is down over 1% this year and is among the worst performing in the region.

“The expected rate decision to hike a last 25bps by the Fed may have been a contributing factor to recent ringgit weakness.” said MUFG Bank’s senior currency analyst, Jeff Ng.

Asian stocks surge ahead of BOJ policy decision

In Thailand, headline inflation dropped to its lowest in 16 months in April, coming in close to expectations owing to lower energy and food prices and a high base in 2022.

The Bank of Thailand (BOT) had raised its policy interest rate by a quarter point to 1.75% in March, and said its policy tightening would continue since inflation risks persisted.

It will next review policy on May 31.

Shares in Bangkok were down 1.4%, their biggest single-day drop in nearly a month.

The weaker-than-expected jump in CPI in Thailand comes just a day after Indonesia’s April annual inflation eased to 4.33%.

Currencies in Asia marginally appreciated against the dollar.

The Taiwanese dollar, Philippine peso and Singaporean dollar were up 0.1% each.

The South Korean won was up 0.3%.

Highlights

** Thai headline CPI up 2.67% y/y in April, slowest pace in 16 months

** US stands with Philippines against Chinese ‘intimidation’ in S. China Sea

** Singapore’s Keppel revamps, aims to manage $150 bln of assets by 2030