Malaysia’s ringgit forwards snapped a three-day decline as improved service-industry growth in the world’s largest economy spurred a surge in global shares and encouraged risk-taking. Government bonds were steady.
The MSCI Asia Pacific Index (MXAP) of stocks advanced to an August 2011 high today after the Dow Jones Industrial Average reached a record yesterday. A non-manufacturing index in the U.S. released yesterday beat estimates to rise to the highest in a year, while China vowed to maintain its 7.5 percent growth target for 2013. Malaysia will keep borrowing costs at 3 percent tomorrow, according to all 19 economists surveyed by Bloomberg.
Twelve-month non-deliverable forwards increased 0.1 percent to 3.1648 per dollar as of 4:25 p.m. in Kuala Lumpur, according to data compiled by Bloomberg. The contracts to buy or sell the ringgit in a year were at a 1.9 percent discount to the spot rate, which slipped 0.1 percent to 3.1053. Non-deliverable forwards are settled in dollars.
“The improvement in global data is giving some support to Asian currencies,” said Wee-Khoon Chong, a rates strategist in Hong Kong at Societe Generale SA. “We expect the ringgit to strengthen to 3 per dollar by the end of the year.”
One-month implied volatility in the ringgit, a measure of exchange-rate swings used to price options, declined for a seventh day, the longest losing streak since April 2012. It fell 17 basis points, or 0.17 percentage point, to 6.67 percent.
The Malaysian currency, which has dropped 1.6 percent against the dollar this year, “could quickly reverse” if the current government stays in power after general elections to be held before the end of June, Arup Ghosh, a Singapore-based hedge funds strategist at Citicorp Investment Bank, said in an interview.
The yield on the 3.418 percent notes due August 2022 was little changed at 3.46 percent, according to data compiled by Bloomberg.
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