SINGAPORE (Reuters) - The Malaysian ringgit hit a three-week high on Tuesday, outperforming some Southeast Asian currencies, as offshore funds bought it after the government cut fuel subsidies to reduce the country's fiscal deficit.

The ringgit advanced 0.29 per cent to 3.2645 against the US dollar, after hitting 3.2590, its strongest since Aug 13.

That compared with a 0.23 per cent gain for the Thai baht and 0.27 per cent appreciation of the Philippine peso.

Late Monday, Malaysia Prime Minister Najib Razak looked to sidestep political opponents and temper market jitters by cutting fuel subsidies to beef up the country's fiscal position, which had spurred capital outflows. The cuts in petrol subsidies, effective from Tuesday, will save the government an estimated 1.1 billion ringgit (S$429 million) this year and another 3.3 billion ringgit in 2014, he said.

Mr Saktiandi Supaat, head of FX research for Maybank in Singapore, said the subsidy cut "will help support the ringgit in so much as it will reduce the fiscal deficit."

"The intensity of support will depend on the budget announcement in October. Still, it is a good start as it will help allay concerns until the budget," he said.

Mr Supaat said the ringgit may outperform other Southeast Asian currencies after the 2014 budget plan and especially if the government takes additional steps such as smaller public spending.

In 2012, Malaysia's budget deficit was 4.5 per cent of gross domestic product, the second highest in emerging markets after India. Ratings agency Fitch cited the high budget deficit as one factor when it lowered the outlook on Malaysia's A-/A credit ratings to negative from stable in late August.

The commodity-dependent country's fiscal gap slowing exports and high foreign ownership of government bonds has highlighted its vulnerability to market sell-offs amid the recent currency rout. The ringgit has suffered monthly losses since May when Najib's coalition extended its 56-year rule but had its worst-ever election performance.

During the four months, it lost 7.4 percent against the dollar, according to Thomson Reuters data. One factor putting pressure on the ringgit in those months was an absence of reforms to reduce the fiscal deficit.