Bloomberg News

Ringgit Set for Weekly Gain on Coordinated Central Bank Action

December 01, 2011

Dec. 2 (Bloomberg) -- Malaysia’s ringgit headed for a weekly gain after joint efforts from central banks to tackle Europe’s debt crisis bolstered appetite for higher-yielding emerging-market assets.

The currency snapped four weeks of losses after six monetary authorities led by the Federal Reserve agreed on Nov. 30 to lower the interest rate on dollar-liquidity swap lines by 50 basis points. The FTSE Bursa Malaysia KLCI Index of stocks gained 3.9 percent this week. Gross domestic product rose 5.8 percent in the third quarter from a year earlier, more than the 4.8 percent forecast by economists surveyed by Bloomberg.

“The central banks’ coordinated move to reduce borrowing costs helped improve risk appetite,” said Saktiandi Supaat, head of foreign-exchange research at Malayan Banking Bhd. in Singapore. “It helps that the fundamentals are still strong.”

The ringgit advanced 2.3 percent this week to 3.1290 per dollar as of 9:36 a.m. in Kuala Lumpur, according to data compiled by Bloomberg. The currency rose 0.3 percent today and reached 3.1155 earlier, the strongest level since Nov. 9.

The MSCI Asia-Pacific Index of stocks rallied 7.6 percent this week. Gross domestic product in Malaysia, Indonesia, the Philippines, Singapore, Thailand and Vietnam will increase an average 5.6 percent from 2012 to 2016, the Organization for Economic Cooperation and Development said in a report on Southeast Asia’s economic outlook, released on Nov. 29.

The yield on the 3.434 percent notes due August 2014 fell seven basis points, or 0.07 percentage point, this week to 3.08 percent, according to Bursa Malaysia. The rate dropped two basis points today.

--Editors: Andrew Janes, Ven Ram

To contact the reporter on this story: Lilian Karunungan in Singapore at lkarunungan@bloomberg.net

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


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