EMERGING MARKETS-Philippine peso, stocks fall amid political turmoil; Asian FX muted

* Philippine Vice President resigns from the cabinet * Bank Indonesia's rate decision in focus * South Korean stocks hit over two-year high By Rajasik Mukherjee June 20 (Reuters) - The Philippine peso and shares declined on Thursday due to a political turmoil in the country, after incumbent vice president resigned from the president's cabinet, while other emerging Asian currencies fell against a steady dollar. The peso, which has depreciated around 5.7% this year, lost 0.2%, eyeing its worst day in nearly three weeks, while stocks shed as much as 0.4%, their lowest level since May 30. Philippine Vice President Sara Duterte left President Ferdinand Marcos Jr's cabinet and resigned as the education minister and vice chair of an anti-insurgency task force amid ongoing rumours that the alliance between them was expected to collapse. "Vice President Sara Duterte has quit from the (Marcos) government... highlighting signs of rift within the administration. We continue to keep a close eye on the domestic political developments," analysts at Maybank said. "We continue to see upside risks to the USD/PHP pair due to both idiosyncratic and external factors." Duterte will, however, remain the Vice president of the Philippines. Globally, market participants are awaiting fresh cues on the Federal Reserve's interest rate trajectory, after the U.S. central bank signalled only one rate cut in 2024 last week. At 0440 GMT, the dollar index was unmoved at 105.260. Other emerging Asian currencies, such as the Singapore dollar, Malaysian ringgit and Taiwan dollar traded flat. In Indonesia, focus will be on the central bank's monetary policy decision, due later in the day. It is expected to maintain its key rate, with a depreciating rupiah, which is currently hovering at four-year lows. The currency lost as much as 0.4%, hitting its lowest level since April 6, 2020, while stocks rose 0.8%. "The recent underperformance of the Indonesian rupiah has increased the risk of a BI rate hike. However, the rupiah has yet to weaken past 16,450 per US dollar....a threshold that we deem will have made it likely for a policy rate hike at this meeting," analysts at MUFG wrote in a note. Elsewhere, South Korean shares hit more than two-year high, boosted by battery maker SK Innovation , which soared after media reports that it was pursuing a merger with energy affiliate SK E&S to shore up its loss-making battery unit. Thai shares fell 0.5%, while Malaysian stocks lost as much as 0.6%, set for their fourth consecutive sessions of losses. Taiwanese stocks, however, rose 0.4%. HIGHLIGHTS: ** Indonesian 10-year benchmark bond yield rises to 7.135% ** Thailand to achieve 3% growth this year, fiscal position strong, finmin says ** Japan's Nikkei falls as heavyweight stocks track European stocks Asia stock indexes and currencies at 0440 GMT COUNTRY FX RIC FX FX INDE STOCK STOCKS DAILY YTD % X S YTD % % DAILY % Japan -0.03 -10.7 <.N2 -0.47 +14.8% 9 25> % China EC> India -0.04 -0.34 <.NS -0.15 8.05 EI> Indones -0.34 -6.21 <.JK 0.78 -6.79 ia SE> Malaysi -0.06 -2.51 <.KL -0.50 9.43 a SE> Philipp -0.22 -5.74 <.PS -0.37 -1.66 ines I> S.Korea 11> Singapo -0.05 -2.37 <.ST -0.28 1.69 re I> Taiwan +0.03 -4.98 <.TW 0.37 29.92 II> Thailan -0.03 -6.83 <.SE -0.51 -8.39 d TI> (Reporting by Rajasik Mukherjee in Bengaluru; Editing by Rashmi Aich)