Ringgit steady as risk-on mood offsets export drop

KUALA LUMPUR (April 5): Ringgit is steady, helped by improved sentiment amid optimism over a US-China trade deal, but the currency may be pressured lower due to a surprise drop in Malaysian exports.

* USD/MYR little changed at 4.0837; that’s near the 4.0877 level reached on April 2, which was the highest since March 18; pair little changed this week

** Support 4.0545, 4.0435, 4.0083; resistance 4.1045, 4.1230, 4.1460

* Exports -5.3% in February y-o-y, steepest drop since 2016, and vs est. +2.3%, official data showed Thursday

** Imports -9.4% in February y-o-y vs est. +0.9%; trade surplus RM11.06 billion vs est. RM10.1 billion

* Malaysian exports and imports may remain subdued given the expected slowdown in global trade, according to note from OCBC Bank

** Oil prices could come under pressure due to US President Donald Trump’s insistence on lower crude costs, and palm oil sector may be hurt by the European Union’s attempt to restrict imports

** Bank Negara Malaysia may deliver a 25bps interest-rate cut as early as July, with a move likely to come only after another regional central bank has eased policy

* MUFG Bank remains bullish on ringgit, and sees USD/MYR declining to 4.0750 by end-2Q and 4.0250 by 4Q, says Sook Mei Leong, head of global markets research

** Expects Asia ex-Japan FX to be supported due to weaker dollar, contained oil prices and real yield advantage vs US

* Malaysia’s 10-year govt bond yield steady at 3.76%

* Foreign-exchange reserves data for end-March due at 3pm local time; no forecast, holdings +0.2% to US$102.6 billion in first two weeks of March

* Govt has expanded the list of goods with controlled prices to include five new items, according to a report in The Edge citing Deputy Prime Minister Datuk Seri Dr Wan Azizah Wan Ismail

* Malaysia’s state debt has declined and is at a manageable level, PM Tun Dr Mahathir Mohamad said Thursday

Source : TheEdgeMarkets