Asian currencies muted ahead of U.S. CPI; Indonesian rupiah steady

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  • Indonesia keeps interest rates unchanged
  • India's cenbank keeps both key interest rates steady
  • Asian FX, stocks broadly flat

Feb 10 (Reuters) - Most Asian currency markets traded cautiously on Thursday as investors await key U.S. inflation data for clues on the pace of the Federal Reserve's monetary policy tightening, while the rupiah held ground as Indonesia kept interest rates unchanged.

The Fed is broadly expected to begin raising rates next month although there is no clarity about the pace of tightening.

The rupiah briefly inched higher after the central bank kept its main interest rates unchanged at record lows on as expected, stressing that it aims to maintain currency and financial market stability while supporting an economic recovery from the COVID-19 pandemic. read more

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However analysts at OCBC Bank wrote in a note that there remained a risk that Bank Indonesia would opt to hike its policy rate in March soon after the Fed meeting "that might see continued hawkishness".

The Jakarta stock index (.JKSE) wiped out earlier gains and was down 0.1% after the announcement.

The Indian rupee slipped 0.3% after the central bank decision though investors were surprised that it left the key deposit rate unchanged against some economists' predictions of a hike to re-align it with short-term money market rates. read more

"We continue to expect the liquidity surplus to be reduced, but clearly RBI wants to keep all its options open depending on how conditions pan out," said Mitul Kotecha, EM strategist at TD Securities.

Other major currencies - the Malaysia ringgit , South Korean won , Thai baht , Singapore dollar and Philippine peso - were all broadly flat with the dollar index inching lower by 0.05% on Thursday.

The Philippines central bank governor said on Wednesday that it was in no rush to raise interest rates and would not necessarily have to move at the same pace as the U.S. Federal Reserve. read more

Sentiment was similar across most stock markets in the region, with South Korean shares

Meanwhile, Malaysian stocks (.KLSE) rose 0.9%, while Philippine stocks (.PSI) slipped 0.9%.

Chinese shares (.SSEC) also fell 0.1% after a slump in battery maker Contemporary Amperex Technology and profit-taking in consumer firms. read more

HIGHLIGHTS

** Top gainers on FTSE Bursa Malaysia Kl Index (.KLSE) include IOI Corporation Bhd (IOIB.KL) up 3.9%, Sime Darby Plantation Bhd (SIPL.KL) up 3.83%

** Indonesian 10-year benchmark yields were down 0.3 basis points at 6.496%​

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Reporting by Indranil Sarkar in Bengaluru; Editing by Emelia Sithole-Matarise

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