Ringgit weakens as 3% UST yield dims EM appeal

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KUALA LUMPUR (April 25): Ringgit falls as most emerging Asian currencies come under pressure after the 10-year U.S. Treasury yield breached the key 3 percent level.

* USD/MYR gains 0.1% to 3.9100

** Support 3.8465, 3.8000, 3.7310; resistance 3.9313, 3.9430, 3.9488

* Pair may see further rebound toward 3.92 to 3.95 as the dollar could extend its rise on the back of higher UST yields, Maybank analysts led by Saktiandi Supaat write in note Wednesday
 
** Still, Maybank maintains view for medium-term MYR strength due to improving domestic factors and a favorable external environment

* MYR’s medium-term prospects will probably be less bullish as the currency approaches fair value, Standard Chartered wrote in note
 
** Co lowers medium-term FX weighting on MYR to neutral from overweight, while keeping short-term overweight 

* Yield on govt bonds due November 2027 steady at 4.19%; had jumped 14 bps on Monday

* The recent correction in Malaysia’s 10-year bonds is expected given rising U.S. rates and higher net domestic supply, says Winson Phoon, head of fixed-income research at Maybank Kim Eng Securities in Singapore

** Co sticks to year-end forecast of 4.20% for the 10-year yield although this level may be breached in the near term

* Govt to auction Islamic bonds due October 2028 by month-end: central bank website