Ringgit gains most in Asia as oil rally offsets fed rate bets

KUALA LUMPUR — Malaysia’s ringgit rose for a third week as a rally in crude helped shield the region’s only major oil-exporter from bets the US will raise interest rates.

The ringgit was set for its best weekly run of gains since July as Brent crude headed for the biggest five-day advance in six weeks. The commodity climbed 3.4 per cent from April 3, easing concern that the government’s finances will deteriorate. The halving in the oil price since June has made the ringgit Asia’s worst-performing currency in the past three months.

“The ringgit is performing better compared to its regional peers this week partly on account of a slight recovery in oil,” said Mr Khoon Goh, Singapore-based senior foreign-exchange strategist at Australia & New Zealand Banking Group. “There is also likely some position adjustment as the market had been bearish on the ringgit for a while.”

The ringgit strengthened 0.6 per cent from April 3 to 3.6465 a dollar as of 12.25pm in Kuala Lumpur, according to data compiled by Bloomberg. It’s appreciated 2.4 per cent in three weeks and climbed to a one-month high of 3.6212 on April 6. It declined 0.4 per cent today (April 10).

Former premier Mahathir Mohamad’s calls for Prime Minister Najib Razak to resign over alleged mismanagement of the economy sent the ringgit lower Friday, said Mr Saktiandi Supaat, head of foreign-exchange research at Malayan Banking in Singapore.

Mr Najib said in an interview on national television yesterday that he will remain leader for as long as he has the mandate of his party and citizens. Dr Mahathir said this month that Najib has lost the trust of Malaysians.

BONDS FALL

One-month implied volatility in the ringgit, a measure of expected moves in the exchange rate used to price options, fell 1.27 percentage point for the week to 9.32 per cent, headed for the biggest drop since 2013.

The Bloomberg-JPMorgan Asia Dollar Index fell as futures traders increased wagers for a June Federal Reserve rate increase to 57 per cent today from 55 per cent on Monday. The odds for a move in September climbed to 78 per cent from 75 per cent.

Malaysia’s factory output increased 5.2 per cent in February from a year earlier, after gaining 7 per cent the previous month, official data showed today. The median estimate in a Bloomberg survey was for a 5.1 per cent advance.

Government bonds fell this week, with the yield on the three-year notes climbing three basis points, or 0.03 percentage point, to 3.34 per cent, data compiled by Bloomberg show. That’s the first five-day advance since Feb 13. BLOOMBERG