Ringgit rises to 7-week high as trade tension eases

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KUALA LUMPUR (March 27): Ringgit rises to a seven-week high as concerns over a global trade war eased after the U.S. engaged in more talks with China.

* USD/MYR declines 0.2% to 3.8885; reached 3.8855, lowest since Feb. 2

** Support 3.8663, 3.8465; resistance 3.9290, 3.9313, 4.0055

** Bloomberg Dollar Spot Index steady after falling 0.4% Monday

** NOTE: U.S. Treasury Secretary Steven Mnuchin spoke with Liu He, China’s vice premier in charge of economic policy, about the trade deficit between the two countries and committed to finding
a mutually agreeable way to reduce the gap

* Malaysian equities and bonds will attract inflows as investors seek yields and currency exposure amid diminishing odds of a trade war, according to Stephen Innes, head of trading for Asia-Pacific at Oanda Corp. in Singapore

** Next key level to watch for USD/MYR is 3.87

* As trade tensions ease, USD will probably continue its broad downtrend, fueling a reduction in long-USD/ASEAN FX positions in the next couple of weeks, Maybank strategists led by Saktiandi
Supaat wrote in note Monday

** Maintains view for MYR strength in medium term on the back of improving domestic factors and a favorable external environment * United Overseas Bank sees the ringgit’s fair value at 3.60-3.70 and expects the currency to be less vulnerable to spikes in volatility, senior economist Julia Goh said Monday

* 10-year govt bond yield climbed 2bps Monday to 3.96%

* Malaysia is seeking to fight fake news with a punishment of up to 10 years in prison as it prepares for an election that must be held by August