Bloomberg News

Ringgit Advances for a Second Day on Global Stimulus Speculation

July 16, 2012

Malaysia’s ringgit advanced for a second day on speculation policy makers in major economies will step up efforts to bolster growth, increasing demand for emerging-market assets.

The MSCI Asia Pacific index of stocks rose ahead of U.S. data due today, which economists predict may show retail sales in the world’s biggest economy rose 0.2 percent in June from a 0.2 percent decrease the month before. China’s Premier Wen Jiabao warned over the weekend the momentum for a recovery in economic growth isn’t yet in place. Federal Reserve Chairman Ben S. Bernanke will present his semi-annual report on the outlook for the U.S. economy and monetary policy to Congress tomorrow.

“People are turning to riskier assets on expectation that policy makers will come out with more stimulus measures to boost economic growth,” said Azmi Shukri Rahman, a foreign-exchange trader at CIMB Investment Bank Bhd. in Kuala Lumpur.

The ringgit strengthened 0.3 percent to 3.1755 per dollar as of 4.15 p.m. in Kuala Lumpur, according to data compiled by Bloomberg. One-month implied volatility, a measure of exchange- rate swings used to price options, fell five basis points, or 0.05 percentage point, to 6.5 percent.

“The Malaysian currency will likely be in the 3.15 to 3.20 range against the dollar before Bernanke’s speech this week,” Azmi said.

China’s gross domestic product increased 7.6 percent in the second quarter from a year earlier, the least in three years, the statistics bureau said on July 13.

Inflation Report

Malaysian consumer prices probably rose 1.7 percent in June from a year earlier, matching May’s slowest pace in two years, according to the median estimate of 17 analysts polled by Bloomberg before government data due July 18.

Ten-year government bonds gained. The yield on the 3.418 percent notes due August 2022 decreased one basis point to a four-month low of 3.43 percent, according to Bursa Malaysia. The treasury will auction 3.5 billion ringgit ($1.1 billion) of Shariah-compliant bonds maturing August 2017 on July 20, the central bank said on its website today.

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 at shendry@bloomberg.net


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