Update Ringgit gains most in emerging markets as oil brightens outlook

by **Cals** Fri 05 Feb 2016, 08:26

Update

[size=28]Ringgit gains most in emerging markets as oil brightens outlook

By Bloomberg / Bloomberg | February 4, 2016 : 6:08 PM MYT
KUALA LUMPUR (Feb 4): Malaysia’s ringgitled gains in emerging-market currencies as an overnight rally in Brent crude brightened the outlook for the oil exporter.

While Brent climbed 7% Wednesday, it’s still down 6% this year. As crude prices showed signs of stabilization above US$30 a barrel, the ringgit has become the second-best performer in developing nations this year on speculation that its worst annual loss in almost two decades in 2015 was overdone. The currency was also supported by a slide in the dollar after a report showed growth in US service industries slowed in January, prompting concern about the strength of America’s economy.

The ringgit strengthened 1.6% to 4.1538 a dollar in Kuala Lumpur, its biggest advance since Jan 22, according to prices from local banks. It has appreciated 3.3% this year, trailing only the Hungarian forint among 24 developing-nation exchange rates tracked by Bloomberg.

“The ringgit benefited from the rise in oil prices and general dollar weakness,” said Khoon Goh, a senior currency strategist at Australia & New Zealand Banking Group Ltd in Singapore. “Further gains will be limited to 4.15, which is a key level.”

The currency rallied 3.5% last week, its biggest advance since October, as Brent climbed almost 8%. The ringgit rose to a three-month high of 4.1195 on Jan. 29 before surrendering those gains on the next trading day on Feb 2.

Futures contracts indicate 49% chance the Federal Reserve will raise rates at or before its Dec. 14 meeting, down from a 93% probability assigned at the end of last year. Financial conditions are “considerably tighter” than at the Fed’s last meeting, but it’s “too soon to draw any firm conclusions,” New York Fed President William Dudley said in an interview with Market News International.

Malaysia’s 10-year sovereign bonds fell, pushing the yield up two basis points to 3.97%, according to prices from Bursa Malaysia. The yield on notes due 2020 declines two basis points to 3.37%.

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