Ringgit volatility drops as oil holds near $50

Ringgit volatility drops as oil holds near $50
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KUALA LUMPUR (July 5): A gauge of anticipated volatility for the ringgit drops as Brent crude holds near $50 a barrel, easing concern about the outlook for Malaysia’s economy.

* 1-month implied volatility for USD/MYR falls 5bps to 5.74%

* USD/MYR declines 0.1% to 4.2930

** Support 4.2810, 4.2663, 4.2505; resistance 4.3093, 4.3337, 4.3525

* MYR will probably have to wait out FOMC minutes, G-20 meeting and expiry of deadline for Qatar to meet a Saudi-led coalition’s demands before finding a direction, says Vishnu Varathan, a senior economist at Mizuho Bank in Singapore

** While higher UST yields and lower risk appetite offset the gains in oil prices, it will be difficult to translate that into conviction trades with durable downside in USD/MYR

* Ambank expects USD/MYR to trade in a range of 4.2820-4.3026 Wednesday, according to daily note

* 10-year govt yield rises 4bps to 4.01%

** Govt to auction 3b ringgit of 7-year bonds on Thursday

* Malaysia’s export growth is likely to remain robust in coming months amid an improving global outlook and increased production capacity in energy sector from the Malikai oilfield, DBS writes in report

* Economy may grow more than 5% this year and ringgit will get better as nation benefits from stable oil prices as well as rising exports and investments, New Straits Times cited Treasury Secretary General Mohd Irwan Serigar as saying