EMERGING MARKETS-Asian FX nudges higher as dollar eases after two-day rally

Updates as at 0701 GMT

By Rajasik Mukherjee and Roushni Nair

Feb 20 (Reuters) - The Thai baht and the Malaysian ringgit led most Asian currencies higher on Thursday, as the dollar eased after a two-session rally, although fears of U.S. President Donald Trump's tariffs kept gains in check.

Trump said on Wednesday that he will announce tariffs related to imports of timber, cars, semiconductors and pharmaceuticals "over the next month or sooner".

A trade dispute between the U.S. and its major partners, particularly China, Southeast Asia's largest trading partner, could negatively impact economic growth and markets, prompting investors to factor this risk into their portfolios.

The Thai baht THB=TH and the ringgit MYR= rose 0.3% each, while the won KRW=KFTC advanced 0.3% to its highest point since January 24.

The U.S. dollar index USD=, which tracks the currency against six major counterparts, fell marginally by 0.2% to 106.97 after rising in the past two sessions.

Equity markets in the region declined following the release of minutes on Wednesday from the U.S. Federal Reserve's January 28-29 policy meeting, which revealed officials' concerns over the inflationary effects of Trump's policies.

Thai stocks .SETI, the worst performers in the region so far this year, lost 0.5%.

Shares in Philippines .PSI dropped nearly 1%, with property developer Ayala Land ALI.PS leading declines.

Malaysian stocks .KLSE inched 0.4% lower, while those in Singapore .STI and Indonesia .JKSE traded flat.

After an unexpected 25 basis-point rate reduction in January, Bank Indonesia (BI) held rates steady as anticipated, while signalling the possibility of further rate cuts.

"We maintain our view that monetary policy is likely to do more of the heavy lifting in supporting growth this year as the government's focus remains on fiscal consolidation," Radhika Rao, a senior economist with DBS Bank, said in a note.

The Indonesian rupiah IDR= depreciated as much as 0.2% earlier in the day but is currently trading flat. One of the region's worst performers, the currency is set to fall for a third straight session.

DBS expects BI to cut rates by at least 50 bps in the first half of 2025, with the timing dependent on rupiah movements and Fed actions amid signs of stalled disinflation.

Elsewhere, Vietnam's parliament approved raising its 2025 growth target, while providing support to major infrastructure projects.

The country's benchmark stock index .VNI gained as much as 0.5% to hit its highest level since October 14, while the local currency, dong VND=, traded nearly flat.

HIGHLIGHTS:

BOJ to raise rates once more this year to 0.75%, most likely in Q3

Malaysia's January exports rise 0.3% y/y, below forecast