Bloomberg News

Ringgit Rises for a Third Day After Fed Signals Further Stimulus

March 27, 2012

Malaysia’s ringgit climbed for a third day, the longest winning streak since February, after the Federal Reserve said monetary stimulus is still needed to sustain a recovery in the world’s largest economy. Bonds gained.

The MSCI Asia-Pacific Index (MXAP) of stocks rose the most in more than three months after Fed Chairman Ben S. Bernanke said yesterday that while he is encouraged by a decline in the U.S. unemployment rate, continued accommodative measures will be needed to make progress.

The ringgit advanced 0.6 percent to 3.0570 per dollar as of 4:09 p.m. in Kuala Lumpur, according to data compiled by Bloomberg. It has strengthened 3.8 percent this quarter, the second-best performance among Asia’s 11 most-used currencies.

“Bernanke’s statement encourages investors to search for higher-yielding assets,” said Yeah Kim Leng, chief economist at RAM Holdings Bhd. in Kuala Lumpur. “We expect the ringgit to strengthen to 2.900 to the dollar by the end of 2012, although the path may be choppy.”

The ringgit’s one-month implied volatility, a measure of exchange-rate swings used to price options, slumped 22 basis points to 7.38 percent.

Malaysia’s gross domestic product will rise at a slower pace this year as financial and economic restructuring in developed nations curb global growth, the central bank said last week. The economy will expand 4 percent to 5 percent in 2012, it said. That is less than the Finance Ministry’s 5 percent-to-6 percent forecast in October, and a 5.1 percent pace in 2011.

Five-year government bonds advanced. The yield on the 4.262 percent notes due September 2016 fell one basis point, or 0.01 percentage point, to 3.30 percent, according to Bursa Malaysia.

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

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


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