Ringgit lingers near 4-month high amid crude rally

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KUALA LUMPUR (Jan 9): Ringgit trades near a four-month high amid signs that the US is keen to strike a trade deal with China, bolstering risk sentiment in Asia. Rising oil prices also underpin gains.

* USD/MYR declines 0.1% to 4.1150; reached 4.1055 Tuesday, lowest since Aug 30

** Support 4.0900, 4.0677, 4.0625; resistance 4.1526, 4.2020, 4.2437

** NOTE: Brent gains 0.7% Tuesday to near US$60

* EM Asian FX’s prospects have improved owing to factors including better-than-expected China services PMI and US jobs data, says Christopher Wong, senior FX strategist at Maybank in Singapore

** Still, risks remain as growth momentum is easing and there’s concern over corporate earnings outlook

** Co. prefers higher-yielding EM Asian FX proxies such as IDR and ringgit over tech-linked or lower yielders including KRW and TWD

* Malaysia’s 10-year govt bond yield steady at 4.07% Tuesday

* Govt sold 10-year Islamic bonds at average 4.130% yield Tuesday, with bid-to-cover ratio of 4.07 times

* Foreign ownership of Malaysian govt, corporate bonds, and bills fell 1.2% to RM184.8 billion in December m-o-m: central bank data

** Full year outflows totaled RM21.9 billion, the largest since 2008

** While overseas holdings have dropped, there are early signs of stabilization in Bank Negara Malaysia’s foreign reserves and FX forward positions, according to note from Maybank Kim Eng Securities

* Chinese embassy in Malaysia has denied a WSJ report that said Beijing promised to influence probes into the 1MDB scandal, calling the accusation “groundless,” according to a report in The Star, which cited a statement

** Govt is looking into allegations that China offered to help deter probes into 1MDB in exchange for infrastructure projects: Finance Minister Lim Guan Eng