Ringgit heads for 4-month high amid stock inflows

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KUALA LUMPUR (Jan 15): Ringgit approaches a four-month high as the dollar extends losses and global funds buy Malaysian stocks.

* USD/MYR weakens 0.1% to 4.0980; reached 4.0935 on Jan 10, lowest since late August

** Support 4.0900, 4.0677, 4.0663; resistance 4.1532, 4.2020, 4.2437

* Overseas investors purchased US$26.1 million of Malaysian equities on Jan 11, a third day of inflows

* USD/MYR will see support at 4.09 in near term, and isn’t likely to head toward 200-DMA of 4.0670, barring a further intensification of negative dollar factors, says Peter Chia, FX strategist at United Overseas Bank in Singapore

** “Despite the strong start, we think it is premature to expect sustained Asia FX strength in 2019 given lingering downside risks to growth and tighter global financial conditions,” says Chia

* Goldman Sachs expects higher carry FX of domestic-demand economies such as PHP and IDR to outperform lower carry, overvalued currencies of small open markets such as KRW, ringgit and THB, according to note Monday

** Co. sees USD/MYR rising to 4.2 in 3 months

* Malaysia’s 10-year yield was little changed at 4.07% Monday

* Govt sold RM3.5 billion of 2026 bonds at average 3.906% yield on Monday, with bid-to-cover ratio of 2.22 times

** Demand was underpinned by the bond’s status as the new seven-year benchmark and ringgit’s continued strength, Maybank Kim Eng analysts Winson Phoon and Se Tho Mun Yi wrote in note

* Securities Commission will issue regulations for initial coin offerings and digital currency trading by end of 1Q: Finance Minister Lim Guan Eng

* Malaysia may extend subsidies to industries it wants to promote, to help them in the initial phases: PM Tun Dr Mahathir Mohamad

* EM fundamentals remain solid, and will weather a potential downturn in global growth and any additional dollar volatility: S&P Global Ratings