Ringgit weakens as USD gains on Trump tax plan

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KUALA LUMPUR (Sept 27): Ringgit drops to three-week low as U.S. President Donald Trump’s tax overhaul plan boosts the dollar across the region.

* USD/MYR gains 0.2% to 4.2165, highest since Sept. 7

** Support 4.1825, 4.1733, 4.1442; resistance 4.2262, 4.2505, 4.2606

** Bloomberg Dollar Spot Index advances for a third day

** NOTE: Trump Is Said to Unveil 35% Individual Tax Rate, Could Go Higher

* MYR is expected to extend declines heading into year-end as the present level is too strong for the economy, says Masashi Murata, a currency strategist at Brown Brothers Harriman in Tokyo

** A strong ringgit would weigh on net exports, which the domestic economy relies on

* Views on ringgit showing divide in recent analyst reports

** Scotiabank FX strategist Qi Gao says currency remains undervalued in terms of either nominal or real effective exchange rate

** Credit Suisse recommends staying long MYR as higher oil prices and upside surprises from Malaysian growth provide support, analysts Ray Farris and Trang Thuy Le wrote in note

** BMI Research raises end-2017 forecast for ringgit to 4.05/USD from 4.20 and end-2018 estimate to 4.00 from 4.10, according to report Tuesday

*** Cites MYR’s bigger-than-expected YTD gains and positive outlook based on improvement in fiscal position and reduced political risks

* Asian Development Bank raised Malaysia’s 2017 growth forecast to 5.4% from 4.7% on expectations that a global trade recovery would boost exports, according to report Tuesday

** Malaysia and Hong Kong received the largest upgrades for this year among major economies

* 10-year govt bond yield climbs 4bp to 3.90%

** Govt to auction 3b ringgit of 2033 Islamic bonds Thursday