Ringgit resumes decline as funds shun equities

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KUALA LUMPUR (April 2): Ringgit resumes its drop as rising outflows from Malaysian equities outweigh a rally in crude prices.

* USD/MYR advances 0.1% to 4.0830; pair rose in six of previous seven sessions

** Resistance 4.0855, 4.1045, 4.1248; support 4.0545, 4.0435, 4.0083

* Overseas investors withdrew US$65 million from Malaysian equities Monday, the biggest one-day outflow in three weeks

* Ringgit remains on track to climb to 3.80/USD by year-end as the dollar is expected to weaken, RHB economist Vincent Loo writes in note

** Ringgit’s gains will be capped if Bank Negara Malaysia (BNM) lowers interest rates

** Maintains view for BNM to stand pat in near term although subdued inflation and a challenging outlook are tilting conditions in favor of a cut

* 10-year govt bond yield holds at 3.79%

* Benchmark 10-year yields have yet to bottom out, and may take out 3.60% this year on the back of ample market liquidity, says Angus Salim Amran, head of financial markets at RHB Investment Bank in Kuala Lumpur

** Malaysian yields are likely to fall further due to factors including a slowdown in bank lending and the Federal Reserve’s rate pause

* Former Malaysian prime minister Datuk Seri Najib Razak said he never failed to pay personal taxes yearly, after The Edge reported the Inland Revenue Board issued him an extra tax bill of around RM1.5 billion for 2011-2017