Ringgit drops to 8-month low before Friday GDP data

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KUALA LUMPUR (Aug 15): Malaysia’s ringgit falls to an eight-month low as the dollar strengthens and traders await a report on Friday forecast to show GDP growth slowed last quarter.

* USD/MYR climbs as much as 0.2% to 4.1030, highest since Nov 29

** Support 4.0413, 4.0391, 4.0083; resistance 4.1093, 4.1230, 4.1355

** USD/MYR is trading near 4.1004, 38.2% Fibonacci retracement of its decline from a January 2017 high to April 2 low. Momentum indicators remain bullish

* MYR has weakened amid the Turkish crisis but it offers higher relative value vs peers due to attractive valuations and Malaysia’s low foreign debt and widening current-account surplus, says Angus Salim Amran, head of financial markets at RHB Investment Bank in Kuala Lumpur

** USD/MYR may drop back to 1-year average of 4.0460 once impact of external risks fade

* Nation’s 10-year bond yield little changed at 4.06%

* Govt on Tuesday sold 2033 bonds at average yield of 4.498% and bid-to-cover ratio of 2.61 times

** Sale garnered strong bids although underlying tone in onshore bond market remains cautious due to the selloff in Turkish lira and fear of contagion effect on EM, Maybank Kim Eng Securities analysts Winson Phoon and Se Tho Mun Yi wrote in note Tuesday

* GDP rose 5.2% y/y in 2Q, slowest pace in more than a year: Bloomberg survey

* Fitch affirms Malaysia’s long-term issuer default rating at A-with a stable outlook