BENGALURU: Most emerging Asian currencies were subdued on Monday as the Federal Reserve-fuelled risk rally faded after investors dialled back expectations of imminent interest rate cuts by the US central bank on recent comments from policymakers.

The Malaysian ringgit, the region’s worst-performing currency this year, edged 0.3% lower. The Thai baht and the Philippine peso also inched 0.2% lower.

Regional equities were mixed, with those in Singapore and Thailand down 0.4% and 0.2%, respectively. Stocks in Philippines advanced 0.5%.

“Risk-rally is facing a bit of a reality check as markets weigh recent comments from Fed officials,” said Christopher Wong, currency analyst at OCBC.

“Expectations for Fed loosening can overshoot and when it corrects, the USD could still be subjected to rebound.”

New York Fed President John Williams said on Friday it was premature to speculate about interest rate cuts in March 2024. The dollar was still hovering near four-month lows on Monday.

The Indonesian rupiah, South Korean won and the Singaporean dollar were all flat. The Taiwanese dollar was down 0.1%.

Regional stocks and currencies received a boost last week after the Fed kept interest rates unchanged as expected and signalled prospects of lower borrowing costs next year.

Echoing the Fed, the Philippine central bank kept its benchmark interest rate steady for a second straight meeting last week, and Taiwanese central bank kept interest rate unchanged on Thursday.

However, both central banks were less dovish than the Fed, with the former not convinced about the downward trend in inflation holding and the latter flagging it would not necessarily follow the Fed in likely rate cuts next year.