Ringgit eyes 2-month low as stock outflows persist

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KUALA LUMPUR (April 10): Ringgit approaches a two-month low as global funds continue to sell Malaysian equities and traders brace for a slew of global risk events Wednesday.

* USD/MYR climbs 0.2% to 4.100; reached 4.1030 Monday, highest since Feb 4

** Support 4.0740, 4.0545, 4.0435; resistance 4.1045, 4.1208, 4.1460

** NOTE: On Wednesday, the Federal Reserve will release minutes of its latest meeting, European Central Bank reviews policy and US inflation figures are due

* Overseas investors withdrew US$2.9 million from Malaysian stocks Monday, taking year-to-date outflows to US$437 million

* EMFX’s prospects have improved after monetary policy turned more dovish globally, says Masakatsu Fukaya, an emerging-market currency trader at Mizuho Bank in Tokyo

** EU-US trade tensions aren’t a concern as US President Donald Trump isn’t likely to take any steps which would hurt US stock markets

** IMF’s latest growth revision is backward-looking and global economy is already showing signs of improvement

* Morgan Stanley remains long EM local FX and ringgit is among the currencies it likes, strategists including James Lord wrote in note Tuesday

** Recent signs of stabilization in China’s data and the positive prints in euro zone’s retail sales and PMI have strengthened co.’s conviction

* Malaysia’s 10-year govt bond yield holds at 3.79%

* Industrial production probably rose 2% in February y-o-y vs +3.2% prior, according to a Bloomberg survey before data due Thursday

* Malaysia’s growth outlook for 2Q has brightened after oil prices recovered and China’s efforts to support its economy proved successful, according to Bloomberg Intelligence

** Tax cuts and GST refunds are supporting domestic demand and Bank Negara Malaysia is expected to maintain the same degree of accommodation in 2019

* Datin Seri Rosmah Mansor, wife of former PM Datuk Seri Najib Razak, will face charges on Wednesday under anti-graft laws, the Malaysian Anti-Corruption Commission said Tuesday

* Felda, a state agency overseeing farmers, will ask for about RM6 billion from the government to help turn itself around, according to a person familiar with the matter