EMERGING MARKETS-Asian currencies edge higher, Mexican peso slips on Trump's tariff plans

By Sneha Kumar

Jan 21 (Reuters) - Currencies in Asian emerging markets nudged higher on Tuesday, while the Mexican peso slipped after U.S. President Donald Trump refrained from imposing tariffs on his first day in office but signalled potential policy moves in the coming days.

Just as investors cheered the possibility of a delay in Trump's implementation of tariffs following a brief mention of the topic in his inauguration speech, the U.S. president said that he was mulling imposing 25% tariffs on Mexico and Canada as soon as Feb. 1.

That sent the Mexican peso MXN= down more than 1%, while the lack of clarity on immediate tariffs on China supported Asian currencies, although investors remained wary.

Trump's inaugural policies suggested he will negotiate rather than immediately impose hefty tariffs on trading partners.

The dollar index =USD bounced 0.6% to 108.65, recovering from a 1.2% overnight drop, its sharpest daily loss since late 2023.

"The absence of any threats on China has kept the hopes of a negotiation alive there, especially after the Trump-Xi phone call last week as well," said Charu Chanana, chief investment strategist, Saxo, Singapore.

"This, along with a softer U.S. dollar, could bring some respite for Asian markets. However, the bar for gains still remains quite high and volatility is inevitable."

The ringgit MYR= rose 0.4% to its strongest level in nearly three weeks, while the Indonesian currency IDR= appreciated 0.2%.

On the other hand, the Philippine peso PHP= snapped a four-day winning streak, slipping 0.4%, while the Singaporean dollar SGD= inched lower.

Chinese stocks .SSEC rose 0.2%, set to gain for a fourth day if the trend continues, while the yuan CNY=CFXS was largely flat against the dollar.

Equities in Kuala Lumpur .KLSE advanced 0.2% for the third consecutive session, while Jakarta stocks .JKSE gained 0.2%, on track for a fifth straight day of gains.

Shares in Singapore .STI declined 0.5%.

Later this week, investors will be on the lookout for interest rate decisions from Bank Negara Malaysia and the Monetary Authority of Singapore (MAS) to gauge their direction of monetary policies.

The Malaysian central bank is likely to keep overnight rates unchanged at 3.00%, while analysts are widely expecting the MAS to recalibrate the tightness of its policy band.

These policy decisions will follow rate moves from Bank Indonesia and Bank of Korea last week, which diverged from market expectations, underscoring the trade-off between growth and currency stability faced by Asian central banks.

HIGHLIGHTS:

Malaysia and EU resume free trade negotiations

Taiwan fourth-quarter economic growth seen slowing to 2%

South Korea's Yoon to attend impeachment trial for the first time

(Reportingby Sneha Kumar in Bengaluru; additional reporting by Ankur Bannerjee in Singapore; Editing by Sherry Jacob-Phillips)

((Sneha.kumar@thomsonreuters.com))