EMERGING MARKETS-Indonesian rupiah slips; Asian assets mark time ahead of Fed

By Shivangi Lahiri

Dec 10 (Reuters) - Most Asian currencies and stocks were subdued on Wednesday as investors awaited the U.S. Federal Reserve policy outlook for 2026, while the Indonesian rupiah slipped on reports a trade deal with the United States might be at risk of collapsing.

The rupiah IDR= eased as much as 0.2% to 16,693 per dollar. It has weakened about 3.5% so far this year, making it one of the worst performers in Asia.

Among other currencies in the region, the Malaysian ringgit MYR= edged down 0.5%, while the Philippine peso PHP= inched marginally higher.

A U.S. official said on Tuesday that a trade agreement reached with Indonesia in July was at risk of collapsing after Jakarta allegedly backtracked on several commitments.

In response, an Indonesian government official said on Wednesday that tariff talks were continuing, with no specific problems emerging during the negotiations.

Investor sentiment towards Indonesian assets has stayed broadly positive, underpinned by stronger government support, including a 16.23 trillion rupiah ($972.73 million) stimulus, liquidity for state banks and an improving growth outlook.

Equities in Jakarta .JKSE, which have hit multiple record highs over the last two weeks, rose 0.3%.

"I believe the market is more immune to the noise from the trade deal unless there is more visibility on the potential impact," said Ernest Chew, head of ASEAN equities at BNP Paribas Asset Management.

"Investors remain constructive on Indonesia because the domestic backdrop is still doing a lot of heavy lifting."

Among stock markets, Malaysia .KLSE and Singapore .STI declined 0.3% and 0.2%, respectively.

With markets pricing in a more than 89% probability of a 25-basis-point Fed interest rate cut later in the day, the spotlight is squarely on its outlook for 2026.

This week's Fed meeting has shaped up as one of the most contentious in years, with five of the 12 FOMC voters already signalling opposition or scepticism toward further easing.

Elsewhere, the South Korean won KRW=KFTC recouped earlier losses to trade little changed, while stocks in Seoul .KS11 edged 0.2% lower.

A South Korean central bank board member urged foreign exchange authorities to curb the won's slide, warning it could reignite inflation and erode household purchasing power.

Thailand's baht THB=TH slipped marginally, while stocks were not trading on account of a public holiday.

($1 = 16,685.0000 rupiah)

HIGHLIGHTS:

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ADB approves $500 million policy-based loan for Indonesia