Ringgit set for best week since October as global selloff eases

by **Cals** Fri 07 Feb 2014, 11:35

Business & Markets 2014

Written by Bloomberg

Friday, 07 February 2014 11:22

(Feb 7) The ringgit headed for its biggest weekly advance since October after a global selloff in emerging- market assets abated and investors reassessed growth prospects for Malaysia’s economy.

The benchmark KLCI stock index rebounded from a four-month low reached on Feb. 4 as concerns eased about the outlook for developing nations following signs of slowing growth in China and political turmoil in Turkey and Thailand. Malaysia will report today it recorded a trade surplus of 9.6 billion ringgit ($2.9 billion) in December, just shy of the 20-month high of 9.7 billion ringgit in November, according to the median estimate of economists in a Bloomberg survey.

“The tensions have eased,” said Sean Yokota, the head of Asian strategy at Skandinaviska Enskilda Banken AB in Singapore. “People are paying attention to the ramifications of those with better fundamentals in emerging markets.”

The ringgit strengthened 0.8 percent from Jan. 30 and 0.1 percent today to 3.3212 per dollar as of 9:09 a.m. in Kuala Lumpur, according to data compiled by Bloomberg. The five-day gain is the biggest since the week ended Oct. 4. Malaysian financial markets were shut Jan. 31 for a holiday.

Export Growth

One-month implied volatility in the ringgit, a measure of expected moves in the exchange rate used to price options, fell 27 basis points, or 0.27 percentage point, this week and nine basis points today to 7.61 percent.

Malaysian exports probably increased 10 percent in December from a year earlier, the fastest growth since August, according to the Bloomberg survey before official data due at 12.01 p.m. local time today. The current-account surplus was 9.8 billion ringgit in the third quarter of 2013, compared with 2.6 billion ringgit in the preceding period, according to official data. Figures for the fourth quarter are due Feb. 12.

The yield on the 3.26 percent government bonds due March 2018 declined eight basis points from Jan. 30 and one basis point today to 3.70 percent, data compiled by Bloomberg show.

Malaysian domestic bond issuance will probably fall to 84 billion ringgit this year from 91 billion ringgit in 2013, and the debt market could see some relief in April when some sovereign notes are redeemed, Morgan Stanley analysts including London-based Simon Waever wrote in a Feb. 5 research note.