BENGALURU: Emerging Asian currencies and equities were subdued on Monday, with the Lunar New Year holiday keeping volumes light while focus was on elections in Indonesia and the Philippines central bank’s policy decision due this week.

The Philippine peso fell 0.3% and stocks retreated 0.2%.

The Bangko Sentral ng Pilipinas (BSP) is set to meet on Thursday to review interest rates. Regional central banks have so far remained in a holding pattern with Bank of Thailand and the Reserve Bank of India keeping key rates unchanged last week.

The BSP said last week that it deems it necessary to keep monetary policy settings “sufficiently tight” until a sustained downtrend in inflation becomes evident, even as data showed that annual inflation increased at its slowest pace in over three years in January.

The Philippine central bank has raised its benchmark interest rate by 450 basis points since May 2022, including an off-cycle hike in October last year. However, it kept the rate steady at 6.5% at its final two policy meetings of 2023.

“BSP will probably wait for the Fed to cut first before considering an adjustment,” Nicholas Mapa, a senior economist at ING, said.

“Given however that inflation has fallen sharply due to favorable base effects and supply side remedies, we do see the BSP cutting rates shortly after the Fed does.”

He expects the Philippine markets to take their cue from the region in the near term, with the peso’s upside likely to be constrained by the current account dynamics.

The Indonesian rupiah inched 0.1% higher and stocks in Jakarta rose as much as 0.7% to a one-month high.

Indonesia is set to hold simultaneous presidential and legislative elections on Wednesday, where citizens will choose a new president and vice president, a parliament, and lawmakers among 20,000 administrative posts across the country.