EMERGING MARKETS-Ringgit leads Asia FX higher as dollar softens; Jakarta assets steady

By Rishav Chatterjee

May 21 (Reuters) - Currencies in emerging Asia traded higher for the second straight session against an easing U.S. dollar on Wednesday, while stock markets lacked direction as investors sought more cues on progress in trade deals.

The Malaysian ringgit MYR= rose as much as 0.6%, leading the gains among its regional peers. The Singapore dollar SGD=, Thai baht THB=TH and Philippine peso PHP= added between 0.1% and 0.5%.

The dollar =USD inched lower against other major currencies as U.S. President Donald Trump failed to make Republican holdouts back his tax bill.

"This is due to the combination of short-term and long-term headwinds for the greenback," said Kyle Rodda, senior financial market analyst at Capital.com.

"There is a move (at the margins) to reduce exposure to U.S. assets due to a loss of confidence in U.S. institutions. Dollar is continuing its move lower and I think that has a cyclical and structural basis."

The ringgit remained about 2.5% below the multi-month highs it reached earlier in May despite advancing in four out of the past six sessions, including today’s gains.

Elsewhere, the Taiwan dollar TWD=TP and South Korean won KRW=KFTC added 0.1% and 0.7%, respectively.

Trump's "reciprocal tariffs" are set to be reinstated in early July, prompting negotiators worldwide to rush to secure trade agreements with the world’s largest economy.

Recent headlines have done little to lift the mood, with the U.S. Treasury saying it does not anticipate any trade deal announcements during this week’s Group of Seven finance leaders' meeting in Canada.

Meanwhile, oil prices climbed following a CNN report that said Israel may be preparing for a potential strike on Iranian nuclear facilities, citing new U.S. intelligence.

Southeast Asian countries including Malaysia and Indonesia are net importers of oil, which have been grappling with declining output and rising domestic consumption.

Indonesian assets were steady ahead of an expected rate cut by the domestic central bank. The rupiah IDR= was flat while equities in Jakarta traded 0.6% in the green.

With growth prospects fading, Bank Indonesia is facing mounting pressure to cut interest rates and support domestic demand amid a weakening global economy.

Its regional peers, including central banks in Thailand and the Philippines, already lowered borrowing costs in April.

Stock markets in emerging Asia were mixed with equities in Taipei .TWII and South Korea .KS11 leading gains.

Shares in Seoul rose after battery makers staged a rebound as Trump failed to receive backing for his tax bill, while equities in Thailand .SETI and Philippines .PSI rose 0.7%.

The Malaysian benchmark index .KLSE was on track for its fifth-consecutive day of losses, bucking the momentum in its regional peers.

HIGHLIGHTS:

Palm oil prices to range between 3,750 to 4,050 ringgit