EMERGING MARKETS-Asian stocks, FX advance after benign US inflation eases rate cut worries

By Roushni Nair

Dec 23 (Reuters) - The Malaysian ringgit and Indonesian rupiah rose on Monday as Asian markets breathed a sigh of relief following a modest rise in U.S. inflation last month that allayed some fears around U.S. interest rate moves next year.

The ringgit MYR=, the region's top performer so far this year, broke a 10-day losing streak to gain 0.5%. The rupiah IDR=, which has lost nearly 5% so far this year, rose 0.4%.

Equities in the region also rallied, with stock indexes in Seoul .KS11 and Jakarta .JKSE each adding more than 1%. Shares in Taipei .TWII had their best session in two months, last up 2.5%.

The Federal Reserve's projection of a measured pace of rate cuts last week sent Treasury yields and the dollar surging, with many central banks, including those of India and Indonesia, intervening in the market to support falling currencies.

Higher U.S. rates could trigger problems for emerging markets such as capital outflows, currency weakness, inflation, and market volatility.

But those concerns eased slightly after U.S. inflation data released on Friday showed only a modest rise in November.

The dollar index =USD, which measures the U.S. currency against six of its largest peers, held steady at 107.72, after the data was released.

"As we have been noting, not all central banks in the region hold the Federal Reserve's policy path and the currency in the same regard when it comes to determining their own monetary policy decisions," analysts at Barclays said in a note on Saturday.

Last week, Bank Indonesia, known for its strong currency focus, surprised markets by holding rates while the Bangko Sentral ng Pilipinas opted to ease monetary policy despite the Fed's hawkish stance.

In Malaysia, domestic fundamentals are expected to remain strong despite global economic uncertainties in 2025, according to Christopher Wong, a currency strategist with OCBC.

"The country's economy faces external uncertainties from three factors: a potential slowdown in the Fed's rate cut cycle, potential U.S. tariffs, and a possible stall in China's economic recovery, all of which could negatively impact the ringgit," Wong said.

In Thailand, the baht THB=TH fell as much as 0.5% while the stock market .SETI was up by 0.3%.

Top Thai officials last week called for swift and drastic interest rate cuts to rescue the economy from "disaster", and also cited concerns over high household debt levels.

HIGHLIGHTS:

** Singapore Nov core inflation at 1.9% y/y, lowest in almost 3 years

** Indonesia says Chinese companies commit $7.46 bln in new investment

(Reporting by Roushni Nair in Bengaluru; Editing by Kate Mayberry)

((Roushni.Nair@thomsonreuters.com))