Bloomberg News

Ringgit Strengthens to Two-Month High as Elections Seen Imminent

April 02, 2013

Malaysia’s ringgit rose to a two-month high on speculation parliament will be dissolved as early as tomorrow, paving the way for polls that could return the government to power. Sovereign bonds fell.

Prime Minister Najib Razak will announce the dissolution via live telecast, the New Straits Times reported today, citing unidentified people who spoke to its sister publication Berita Harian in the Malay language. Najib has embarked on a $444 billion, 10-year infrastructure development plan. The country’s benchmark share index rose, snapping a two-day decline.

“Most of the weakness was on the back of the election uncertainty,” said Wee-Khoon Chong, a rates strategist in Hong Kong at Societe Generale SA. “Once parliament is dissolved, people will be more comfortable. The overall expectation is for the status quo in the formation of the government.”

The ringgit advanced 0.2 percent, its fourth day of gains, to 3.0880 per dollar as of 4:22 p.m. in Kuala Lumpur, according to data compiled by Bloomberg. It touched 3.0811 earlier, the strongest level since Jan. 30. One-month implied volatility, a measure of expected moves in exchange rates used to price options, declined three basis points, or 0.03 percentage point, to 6.82 percent.

Najib’s approval rating fell to an 18-month low of 61 percent in February from 63 percent at the end of December, according to the latest available survey by the Merdeka Center for Opinion Research released Feb. 26.

The yield on the 3.26 percent government bonds due March 2018 climbed one basis point to 3.23 percent, according to data compiled by Bloomberg.

To contact the reporter on this story: Liau Y-Sing in Kuala Lumpur at yliau@bloomberg.net

To contact the editor responsible for this story: James Regan at jregan19@bloomberg.net.


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