Ringgit in holding pattern ahead of Eid holiday

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KUALA LUMPUR (June 14): Ringgit trades in a narrow range with emerging market currencies in Asia showing muted reaction to the Federal Reserve’s policy decision and rate forecast. Trading interest is also thin ahead of the Eid holiday.

* USD/MYR steady at 3.9940 vs range of 3.9922-3.9940

** Support 3.9430, 3.9213, 3.8533; resistance 4.0060, 4.0155, 4.0451

** NOTE: Malaysia’s markets are shut Friday for Eid

* Fed’s overnight rate decision is unlikely to spur capital outflows from Asia as markets were prepared for 4 hikes this year and regional central banks have room to defend their currencies, says Ken Cheung, a senior Asian FX strategist at Mizuho Bank in Singapore

** If the ECB joins the Fed in normalizing policy, this would accelerate outflows from the region and weigh on Asian FX

* Ringgit is among the currencies that’s most at risk from a deterioration in emerging-market manufacturing, with Malaysia’s FX reserves adequacy below the IMF’s suggested range: TD Securities 

* In contrast, Goldman Sachs says U.S. real-money funds are generally constructive on the ringgit although there are concerns about Malaysia’s fiscal outlook following last month’s unexpected election result

* 10-year bond yield ended little changed at 4.23% Wednesday

* Govt’s review of large infrastructure projects and outstanding 1MDB debt will play key role in determining contingent liability risk on Malaysia’s credit profile: Moody’s Investors Service 

* Trading on Bursa Malaysia will end after the morning session on Thursday, ahead of holiday on Friday