Ringgit set for longest rally since 2010

Malaysia’s ringgit was set to advance for a sixth week, its longest
rally in more than three years, on speculation further monetary easing
in Japan and Europe will boost demand for emerging-market assets.


The European Central Bank will cut its benchmark interest rate next
week, according to 30 of 45 economists in a Bloomberg survey before a
May 2 review. The Bank of Japan will set monetary policy today after
announcing unprecedented easing this month. Jobless claims in the US
fell to a six-week low, a report yesterday showed. Malaysian government
bonds fell.


"Expectations of monetary easing have boosted Asian currencies,"
said Gundy Cahyadi, an economist at Oversea-Chinese Banking Corp in
Singapore. "The US jobless claims numbers lifted sentiment.


The ringgit advanced 0.3 per cent for the week and 0.4 per cent
today to 3.0262 per dollar as of 9.52am in Kuala Lumpur, according to
data compiled by Bloomberg. The last time the currency advanced for six
straight weeks was in the period ended March 19, 2010. One-month implied
volatility, a measure of expected moves in exchange rates used to price
options, rose 60 basis points this week, or 0.60 percentage point, and
fell two basis points today to 8.38 per cent.






Foreign holdings of Malaysian government bonds climbed 0.7 per cent to
RM130.6 billion in the first two months of this year, according to
central bank data.


Monetary policy should remain accommodative to boost growth in
advanced economies, the International Monetary Fund said in a report
yesterday. Bank of Japan Governor Haruhiko Kuroda unveiled a plan on
April 4 to double holdings of government bonds in the next two years
targeting two per cent annual inflation.


The yield on Malaysia’s 3.26 per cent sovereign notes due March 2018
rose one basis point this week and today to 3.17 per cent, according to
data compiled by Bloomberg.


Japan will use foreign-exchange reserves to buy the bonds of
Southeast Asian countries, according a Nikkei newspaper reported today,
without saying where it got the information. The 10-member Association
of Southeast Asian nations comprises Brunei, Cambodia, Indonesia, Laos,
Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam.--
Bloomberg