Ringgit headed for its best year since 2010

Ringgit headed for its best year since 2010
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KUALA LUMPUR (Dec 29): Ringgit climbs to its strongest level in more than three weeks after the dollar slumped overnight and crude prices extended gains. The Malaysian currency is set for its best annual performance in 7 years.

* MYR is up 10.4% this year, poised for its biggest annual gain since 2010 following a rebound in oil prices and expectations of BNM rate tightening

* USD/MYR drops 0.1% early Friday to reach 4.0635, lowest since Dec. 6

* USD/MYR may slip below 4.05 to re-test 4.03 on a softer USD and firmer crude prices, says Vishnu Varathan, head of economics and strategy at Mizuho Bank in Singapore

** Pair’s decline may stop short of 4 if oil prices and dollar do not remain supportive

* BNM is among regional central banks that face mounting pressure to normalize benchmark interest rates as real policy rates are negative, Scotiabank strategist Qi Gao writes in note

** MYR remains undervalued and upcoming general election will spur expectations of more pro-growth policies

** Maintains short USD/MYR position with new target of 3.90 and plans to add on rallies

* 10-year govt yield fell 1bp to 3.95% Thursday

* Data due next week include December Nikkei PMI and November external trade