Bloomberg News

Ringgit Gains Most in Seven Weeks on Joint Central Bank Action

December 01, 2011

Dec. 1 (Bloomberg) -- Malaysia’s ringgit climbed the most in seven weeks after six central banks led by the Federal Reserve made it cheaper for lenders to borrow dollars, spurring demand for higher-yielding assets.

The MSCI Asia-Pacific Index of shares rose for a fourth day after the monetary authorities agreed to reduce the interest rate on dollar-liquidity swap lines by 50 basis points. The ringgit reached the strongest level in two weeks after Bank Negara Malaysia data showed that global funds raised holdings of local-currency debt by 2.6 percent in October, the first increase since July.

“Risk appetite has improved, tracking developments in Europe and the U.S.,” said Zulkiflee Nidzam, head of foreign- exchange trading at Asian Finance Bank Bhd. in Kuala Lumpur. “The ringgit’s gain may be limited as the debt crisis in Europe isn’t resolved yet.”

The ringgit surged 1.1 percent, the most since Oct. 10, to 3.1410 per dollar as of 4.06 p.m. in Kuala Lumpur, according to data compiled by Bloomberg. It touched 3.1360, the currency’s strongest level since Nov. 15.

The value of ringgit-denominated debt held by global funds rose to 171.6 billion ringgit ($55 billion) from 167.3 billion ringgit in September, Bank Negara Malaysia said on its website. Their holdings of government bonds climbed 2.2 percent to 94.7 billion ringgit, the figures showed.

Five-year government notes advanced. The yield on the 4.262 percent securities due September 2016 decreased two basis points, or 0.02 percentage point, to 3.27 percent, according to Bursa Malaysia.

--Editors: Ven Ram, James Regan

To contact the reporter responsible for this story: Elffie Chew in Kuala Lumpur at echew16@bloomberg.net.

To contact the editor responsible for this story: Sandy Hendry at shendry@bloomberg.net.


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