Currency Ringgit poised to snap longest run of weekly declines since 1971

by **Cals** Sat 19 Sep 2015, 02:11

Currency

[size=28]Ringgit poised to snap longest run of weekly declines since 1971

By Bloomberg / Bloomberg | September 18, 2015 : 12:17 PM MYT

KUALA LUMPUR (Sept 18): Malaysia’s ringgit was set to snap the longest run of weekly declines in more than four decades, after the U.S. refrained from raising interest rates and a rally in the price of Brent crude improved prospects for the net oil exporter.

The ringgit headed for its first weekly advance in three months, strengthening 1.7% to 4.2467 a dollar as of 11:16 a.m. in Kuala Lumpur, according to prices from local banks compiled by Bloomberg. Its 0.2% gain on Friday pared its loss this year to 18%, still the worst performance in Asia.

Federal Reserve Chair Janet Yellen held borrowing costs near zero on Thursday, saying afterward that most U.S. policy makers still expect to raise rates this year. The delay reduces the risk of outflows from Malaysian debt and stocks. Brent crude headed for a weekly increase, a boon for a nation that derives 22% of its revenue from oil-related sources.

“It’s a relief rally because the Fed has delayed raising interest rates,” said Wong Chee Seng, a currency strategist atAmBank Group in Kuala Lumpur. “Improved oil prices helped the ringgit’s sentiment.”

Traders in the federal funds futures market marked down the chances of a December rate rise to 45%, following news of the decision, compared with 64% on Wednesday. The ringgit’s rebound may be short-lived as the Fed’s inaction increases uncertainty in the market, Wong said.

Malaysian central bank Governor Zeti Akhtar Aziz said the country faces a “very challenging” period that it’s been able to manage so far and the ringgit’s decline has been affected by many factors including domestic ones, according to a report in the local New Straits Times newspaper on Thursday.

The yield on the sovereign bonds due September 2025 fell three basis points this week and two points on Friday to a six- week low of 4.15%, according to prices from Bursa Malaysia.

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