BENGALURU Asian emerging market currencies were subdued on Monday after inflation data in the US further dimmed the prospects of interest rate cuts soon, with all eyes on the Federal Reserve's (Fed) policy meeting later in the week.

The South Korean won depreciated 0.4% against the greenback while the Indonesian rupiah fell 0.2%.

Most equities in the region, on the other hand, rose, with the markets in Manila and Taipei leading gains, both rising 1.6%.

The Fed's two-day monetary policy meeting beginning Tuesday will now take centre stage for the week, where expectations are for the central bank to keep rates on hold.

Investors are already anticipating a delay to rate cuts due to sticky US inflation and as officials, including Chair Jerome Powell, emphasise data dependency.

Market pricing now points to the first Fed rate cut in September, down from an expected June start just weeks ago, with around 30 basis points of easing projected for the year.

Any guidance on the central bank's rate outlook is key.

"While we cannot rule out the tail risk of the Fed putting a rate hike back on the table, should the Fed continue to sound balance in terms of rate guidance, the greenback may even soften along with US rates," said Fiona Lim, senior FX strategist at Maybank.

Back in Asia, the higher-for-longer US interest rates, along with recent weakness in the regional currencies, are "likely to delay rate cuts in the Asia region till next year or even lead to potential rate hikes this year", said Lloyd Chan, FX Strategist at MUFG.

The Thai baht slipped 0.2% while Bangkok stocks gained 0.2%.

The Malaysian ringgit edged 0.1% lower while equities in Kuala Lumpur gained 0.2%.

  - Reuters