(Updates for afternoon trade)

* Taiwan stocks hit a record high on AI frenzy

* South Korean stocks end at their highest close

* Indonesian rupiah dips as MSCI decision looms

* Bank of Thailand expected to keep rates unchanged - Reuters poll

By Rajasik Mukherjee

June 22 (Reuters) - A gauge of emerging Asian stocks hit a peak on Monday, after Taiwan and South Korea benchmarks closed at record levels on AI-fuelled rallies, while regional currencies struggled as investors assessed the U.S.-Iran peace deal.

The MSCI EM Asia gauge advanced as much as 1.5% to hit a record high. South Korea and Taiwan stock benchmarks make up about 60% of the index.

Taiwan's benchmark surged 2.8% to close at 47,741.51 points, its sixth consecutive session of gains. South Korea's main KOSPI index closed 0.7% higher at 9,114.55 points.

SK Hynix became the world's most valuable memory chipmaker, overtaking Samsung Electronics ( SSNLF ), underpinned by the growing demand for the chips used in AI systems for customers such as Nvidia ( NVDA ) and Alphabet's Google.

"Today's equity trading shows that AI remains the strongest counterweight to geopolitics and higher rates," said Glenn Yin, director of research at brokerage ACCM.

"Korea and Taiwan are being treated as direct beneficiaries of the semiconductor and AI capex cycle, while Japan is getting an extra boost through large tech and AI-linked names."

The first round of talks between U.S. and Iranian officials in Switzerland ended Monday, mediators said, adding both the officials made "encouraging progress".

The development comes after a tense opening marked by Tehran's announcement it had again closed the Strait of Hormuz and U.S. President Donald Trump repeating his threats to resume attacks on Iran.

A steady U.S. dollar kept Asian currencies under pressure as investors remained cautious about oil-import-dependent emerging-market economies.

The MSCI EM currencies gauge dipped 0.3% for a third consecutive session. The Indonesian rupiah weakened to 17,825 per dollar, while the Indian rupee snapped a six-session winning streak to slip to 94.405 a dollar.

For Indonesia, a highly anticipated MSCI verdict on the country's emerging markets status in early Asia hours on Wednesday could provide a lift to an under-pressure market or deal yet another blow to Southeast Asia's biggest economy.

"A downgrade would likely exacerbate capital outflows and could reinforce risk aversion, and open the door to even more downside risk for the country's equity and currency," Yin said.

The South Korean won dipped 0.5% to 1,539 per dollar, not far from a two-week low. The Philippine peso also fell to its weakest point since June 12, sliding for the fifth consecutive session.

Thailand's baht inched 0.3% lower, ahead of the central bank's policy decision, due on Wednesday.

A Reuters poll showed that the central bank is expected to stand pat on its rates June 24 and through the rest of 2026.

HIGHLIGHTS:

** UK's Starmer says he will resign

** Japan's FX messaging keeps markets on edge over yen intervention risk

** China keeps lending benchmark LPRs unchanged for 13th month in June

Asia stock indexes and currencies at 0805 GMT

COUNTRY FX RIC FX FX YTD INDEX STOCKS STOCK

DAILY % DAILY % S YTD

% %

Japan -0.26 -3.12 China >

India >

Indonesia -0.28 -6.48 9

Malaysia -0.39 -2.27 Philippine -0.57 -3.63 -1.64 -0.30

s

S.Korea > 8

Singapore -0.25 -0.61 -0.19 11.54

Taiwan >

Thailand >