Emerging Asian currencies and stocks were subdued on Tuesday, with Indonesia losing ground ahead of a monetary policy meeting, as investors digested the Fed chief's dovish comments and the rising odds of Donald Trump winning the U.S. presidential race.

The dollar inched away from five-week lows as investors weighed the case for a September rate cut after Fed Chair Jerome Powell's comments.

Markets were assessing the ramifications of Trump's potential return to the White House, with worries intensifying that his hawkish trade policies, loose fiscal plans and potential tax incentives could fan inflation.

Trump's re-election "may cause a stronger USD and more local currency headwinds," said Jeff Ng, head of Asia Macro Strategy at SMBC.

"This is possibly due to higher inflation and interest rate outlook in the U.S. in the medium term, posing risks to current account balances in Asia."

A stronger dollar has pressured risk-sensitive emerging market assets, pushing developing countries to raise borrowing costs to prevent capital outflows which in turn has impacted economic growth.

The Indonesian rupiah slipped 0.3%, while equities in Jakarta fell 0.5% ahead of a Bank Indonesia (BI) meeting on Wednesday where it is widely expected to keep interest rates unchanged.

"We anticipate slightly elevated levels above 16,000 in the near-term," Jeff said, referring to the rupiah's level against the dollar.

The dollar-rupiah pair will rally below 16,000 levels as a Fed rate cut will help increase yield differentials compared to Indonesia, Jeff added.

Elsewhere, the Malaysian ringgit edged lower and Thailand's baht dipped 0.3%, while the Singapore dollar was largely flat.

Equities in Malaysia edged down 0.2%, giving up the early gains.

On the other hand, stocks in Taiwan rose as much as 1.2%. Philippine and South Korean shares edged higher, while those in Singapore and Indonesia lost around 0.3% and 0.5% respectively.

The Chinese yuan and the Shanghai Composite index fell for a second consecutive day, after data showed on Monday that the world's second-largest economy grew much slower than expected in the second quarter.

"The big picture is that the Chinese economy still remains in need of more stimulus, while more importantly, requires meaningful long-term reforms to turn market sentiment around," analysts at MUFG wrote. 

 - Reuters