Ringgit rallies to 8-month high after dovish Fed

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KUALA LUMPUR (March 21): Ringgit rallies to an eight-month high as increasing signs of an extended pause in US policy tightening burnish the appeal of emerging-market assets.

* USD/MYR drops 0.1% to 4.0610 in a fourth day of declines; reached 4.0545 earlier, lowest since July 26

** Support 4.0435, 4.0083; resistance 4.0906, 4.1045, 4.1327

** Federal Reserve Chairman Jerome Powell said Wednesday that US interest rates could be on hold for “some time” as global risks weigh on the economic outlook and inflation remains muted

* Pair’s close below 4.07 on Wednesday paves the way for a move to 4.03-4.05 by end-1Q, says Choong Yin Pheng, general manager for fixed income and economic research at Hong Leong Bank in Kuala Lumpur

** BNM’s dovish tilt in March monetary policy statement suggests the benchmark interest rate may be lowered should downside risks worsen

** Any easing would have limited impact on ringgit as dollar is likely to be weak due to a more dovish Fed

* 10-year govt bond yield declines 6bps to 3.80%

* Auction of RM2 billion of 30-year govt bonds closes at 11:30am local time

* Malaysian equities are poised for a strong rebound when global funds return due to strong local fundamentals, according to Permodalan Nasional Bhd, the nation’s largest state-owned asset manager