BENGALURU Stocks across emerging Asia advanced on Wednesday (Feb 1), while currencies were muted as investors awaited the Federal Reserve's policy decision to gauge whether the US central bank is nearing the end of its interest rate-hike cycle.

The Philippine peso appreciated 0.3% and led gains among regional currencies. Indonesia's rupiah, the Singapore dollar and South Korea's won were flat.

While the Fed's rate decision scheduled for 1900 GMT is a key event, Chair Jerome Powell's news conference afterwards will take the limelight, as investors will look for signs on the central bank's trajectory for future policy decisions.     

"The focus is that when the Fed will start the rate cut cycle, and whether the central bank will change its stance on 'higher for longer' guidance," said Tina Teng, markets analyst at CMC Markets.

"Though a sooner Fed pivot is sceptical, market participants are probably pricing in a less hawkish Fed on the back of cooling inflation and a deteriorating economic outlook."

The dollar index, which measures the greenback against six major peers, shed 0.1% to 102.05 as of 0613 GMT. It was broadly flat earlier in the session.

Indonesia's January inflation cooled to its slowest rate in five months, but remained above the central bank target, data showed. 

Last month, the country's central bank signalled an early end to its tightening cycle to bring down the headline inflation to within its target range of 2%-4% in the second half this year.

"CPI inflation surprised to the downside in January 2023, supporting our view that further rate hikes are unlikely," said Brian Tan, a senior regional economist at Barclays.

India's rupee firmed 0.1%, while equities advanced 0.6%. The country's government unveiled the Union budget for fiscal 2023/24 that aims to raise capital expenditure to create jobs ahead of a general election.

A rebound in the tourism sector and increased domestic consumption may boost Thailand's economy to grow as much as 4% this year, which would be its fastest rate in five years.

The baht, which is the best performing currency in the region so far this year, fell 0.3%. Thai stocks rose 0.6%.

Indonesia's benchmark index added 0.5% and Seoul shares gained 0.8%.

Equities in Manila surged 1.7% and were on track for their best session since Jan 16. 

Markets in Malaysia were closed for a public holiday.

  - Reuters