EMERGING MARKETS-Asian currencies fall as middle east tensions boost dollar safe-haven demand

By Himanshi Akhand

June 18 (Reuters) - Emerging Asian currencies lost ground on Wednesday as the dollar held firm on safe-haven demand as the conflict between Israel and Iran entered a sixth day, while investors awaited rate decisions by the Bank Indonesia and the Federal Reserve.

Iran and Israel launched new missile strikes at each other, with U.S. President Donald Trump calling for Iran's unconditional surrender and warning U.S. patience was wearing thin.

Moreover, market jitters intensified after officials said the U.S. military is bolstering its presence in the region.

The Israeli shekel ILS= was last largely flat at 3.5048 per dollar. It fell 0.4% on Tuesday.

The MSCI index of emerging market currencies .MIEM00000CUS edged down 0.2%. The Malaysian ringgit MYR= inched 0.1% lower, and the Indian rupee INR=IN fell to a more than two-month low.

The dollar index =USD was little changed after a 0.6% jump in the previous session.

Oil prices extended gains after jumping more than 4% on Tuesday.

Most emerging Asian economies, except Malaysia, import the bulk of their oil requirements, and increasing crude prices also hurt their currencies.

The Philippine peso PHP= fell 1% to its lowest level since mid-April.

The peso has performed well for most of this year, which is making it vulnerable as negative factors, including higher oil prices and concerns of a rate cut by the central bank, start weighing in, said Alan Lau, FX strategist at Maybank.

The Bangko Sentral ng Pilipinas (BSP) is expected to lower its key interest rate by 25 basis points on Thursday.

The Taiwanese dollar TWD=TP was flat, and the South Korean won KRW=KFC inched up 0.1%.

In Indonesia, the rupiah IDR= weakened 0.3% and stocks .JKSE fell 0.5% ahead of the central bank's monetary policy decision later in the day.

"Today's BI rate decision is likely to be a close call, split between a pause and a back-to-back rate cut," DBS analysts said in a note.

Inflation developments are conducive, with recent stimulus measures expected to further restrain price pressures, however, policymakers might view the recent Middle East tensions and its impact on the regional currencies with trepidation, they added.

Other regional stock markets were mixed. Manila .PSI and Singapore .STI shares fell 0.1% and 03%, respectively.

Taipei .TWII and Seoul .KS11 equities rose 0.4% and 0.2%, respectively, driven by technology stock gains.

Markets were also awaiting the Federal Reserve's policy decision later on Wednesday, expectating for the central bank to stand pat on rates.

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