Ringgit hits year’s low as GDP growth seen slowing

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KUALA LUMPUR (May 15): Ringgit is trading at its weakest level this year before a report due Thursday that is expected to show Malaysia’s economic growth slowed last quarter.

* USD/MYR steady at 4.1730 and reached 4.1740, highest since Dec 27

** Support 4.1500, 4.1413, 4.1252; resistance 4.1785, 4.1875, 4.1925

* EM Asia FX have largely priced in risks from the trade war, and focus is now on China data and oil supply issues, says Christopher Wong, senior FX strategist at Maybank in Singapore

** On Tuesday, co. suggested taking profit on trades including short USD/JPY, long IDR/KRW and long USD/KRW via options

** Markets may consolidate after recent sharp moves and traders are awaiting meeting between US and China’s leaders at the G-20 summit

* Malaysian GDP probably expanded 4.3% in 1Q y-o-y, slowest since 3Q 2016: Bloomberg survey

* 1Q current-account data also due Thursday; surplus forecast at RM12.8 billion, biggest in a year

* Malaysia’s economic growth is likely to pick up in 2H due the revival of key infrastructure projects, looser monetary policy and base effects, according to note from United Overseas Bank on Tuesday

** Co. forecasts full-year GDP growth of 4.6%, with central bank expected to keep policy unchanged for now

* 10-year sovereign yield steady at 3.84%

* Govt sold RM2 billion of 30-year Islamic bonds at avg 4.638% yield on Tuesday; bid-to-cover ratio was 3.3 times, highest since Feb 27

** Auction was well bid despite weaker ringgit and global trade risks, as demand for Shariah-compliant bonds stems largely from onshore investors, according to note from Maybank Kim Eng Securities

** Strong demand reflected ample domestic liquidity and decent demand to absorb supply of ultra-long bonds

* Japanese investors bought 206.6 billion yen of long-term Malaysian sovereign and corporate debt in March, a record in data compiled by Bloomberg going back to 2005

* Malaysian lawmakers will be required to declare their assets as part of the nation’s anti-graft drive, PM Tun Dr Mahathir Mohamad said Tuesday