Ringgit recovers as dollar rally loses steam

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KUALA LUMPUR (May 22): Ringgit rises for first time in almost two weeks as a rally in the dollar stalls and crude prices extend gains.

* USD/MYR drops 0.2% to 3.9710 after advancing 1.2% in past nine days as the Bloomberg Dollar Spot Index retreats from its YTD high

** Support 3.9071, 3.8465, 3.8000; resistance 4.0060, 4.0155, 4.0695

* Brent gains 0.3% to $79.43 on concerns of declines in Venezuelan crude production and as U.S. stockpiles were seen falling a third week

* Every $10 increase in oil prices may boost Malaysia’s energy revenues by 0.4%-0.5% of GDP, Goldman Sachs economists including Goohoon Kwon wrote in note Monday

** Still, the extra income might not be enough to offset losses from the removal of the goods and services tax and additional spending detailed in a recent supplementary budget

* MYR is among EM FX that Payden & Rygel Investment Counsel favors, and the asset manager says this is the time to buy developing-nation assets

* Ringgit will strengthen to 3.75 by end-Sept as rising oil prices boost the economy, while the removal of the GST will have little negative impact: CIMB

* Recent selling pressure on Asian FX should ease as the region’s fundamentals remain sound and markets will adjust to 10-year UST yields trading above 3%, says Khoon Goh, head of Asia research at ANZ Banking Group in Singapore 

** This presents buying opportunities; THB and KRW are attractive due to their current-account surpluses

* 10-year govt bond yield climbs 1bp to 4.22% * Malaysia has sworn in 14 cabinet ministers, including Finance Minister Lim Guan Eng, as PM Mahathir Mohamad moves to implement his economic agenda

* Nation’s debt has climbed to more than RM1t from about RM300b due to irregularities in financial management under the previous govt, according to a report in The Edge citing PM Mahathir 

* A task force to revive probes into state investment fund 1MDB will meet Tuesday, according to former Attorney-General Abdul Gani Patail who’s leading the team

* Foreign-exchange reserves data for May 15 due at 3pm local time; no forecast, holdings fell 0.5% to $109.5b in the final two weeks of April