Tuesday 06 Jun 2023
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KUALA LUMPUR (June 8): Ringgit edges lower for a fourth day amid weak demand for emerging-market assets and caution before a Group-of-Seven summit this week.

* USD/MYR climbs 0.1% to 3.9800; pair is still little changed this week

** Support 3.9430, 3.9232, 3.8533; resistance 4.0060, 4.0155, 4.0512

* G-7 leaders will meet in Quebec starting Friday, with trade expected to dominate talks after the U.S. imposed steel and aluminum duties on its trading partners

* USD/MYR is encountering significant resistance around 3.9850-3.9875 and a break of this range may see it test 4, says J. Suresh Sundaram, FX strategist at CIMB in Kuala Lumpur

** Ringgit is expected to be rangebound in the near term as a decline in Treasury yields will counter any weakness stemming from risk aversion

* Malaysia’s 10-year yield rises 1bp to 4.21%

* Govt sold 20-year bonds Thursday at avg yield of 4.893% and bid-to-cover ratio of 1.94

** Demand was decent as yields are attractive to domestic buy-and-hold investors and govt measures to address fiscal concerns have bolstered sentiment, Winson Phoon, head of fixed-income research at Maybank Kim Eng Securities in Singapore, wrote in note

** Still, market is somewhat cautious amid change of leadership at the central bank and some govt-linked companies 

* Foreign holdings of Malaysian govt bonds fell 5.4% to a 9-month low of RM171.7b in May, central bank data showed Thursday

* United Overseas Bank expects policy continuity to prevail despite the change in leadership at BNM, economist Julia Goh wrote in a note Thursday 

** Risks to growth are balanced and BNM will likely stay on hold for rest of the year

* Malaysian authorities have issued an arrest warrant for financier Low Taek Jho as they press ahead with a probe into troubled state investment fund 1MDB 

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