MYR has rallied ~13% vs. USD over the....>

DOLLAR-MYR: MYR has rallied ~13% vs. USD over the past year, with the Bank

Negara Malaysia's hiking cycle set to underpin the MYR bull market (See Main

Wire At 09:16 GMT 03/21). MYR has recovered from the panic lows of late '16,

when BNM intervened to ban offshore MYR trades in order to quell downside

volatility. A pick up in exports, due in part to the recovery in Terms of Trade,

has facilitated a recovery in portfolio investment.

- Real GDP growth is on track to exceed 5.0% in '18 & policymakers are showing

no sign of discontent with the declining trend in inflation. Oil's recovery is

also supportive for the MYR, while BNM appears content with the pace of the MYR

app'n. MYR is far below its 10-Year MA in real effective terms, which when

coupled with solid fundamentals, should allow the currency to mean revert. One

key risk is the upcoming general election that must be held before Aug 24.

- From a technical perspective a USDMYR close above 3.9420 is still needed to

hint at a move back to 3.9830. Bears need a close below the 21-DMA (3.9093) to

return initial focus to 3.8630-8880 where YtD lows are found.