Ringgit rises to 14-year high
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Ringgit rises to 14-year high
Malaysia’s ringgit rose to the strongest level in almost 14 years after the central bank said it is focused on taming inflation, spurring speculation interest rates will be increased.
Bank Negara Malaysia Governor Zeti Akhtar Aziz said yesterday a lot of attention is being paid to dealing with inflation because it erodes purchasing power. The Dollar Index, a gauge of the greenback’s strength, retreated as Republicans and Democrats failed to agree on a plan to raise the U.S.’s US$14.3 trillion debt ceiling ahead of an Aug. 2 deadline, heightening the risk of a default. Government bonds declined.
“There’s still room for higher rates, not just in Malaysia but across most economies in Asia that are still facing inflation threats,” said Nik M. Khairul, a currency trader at Asian Finance Bank Bhd. in Kuala Lumpur. “We expect the U.S. will do all it can to avoid a default or an economic crisis.”
The ringgit strengthened 0.6 per cent to 2.9538 per dollar as of 4:15 p.m. in Kuala Lumpur, according to data compiled by Bloomberg. It touched 2.9509 today, the strongest level since September 1997. The Bloomberg-JPMorgan Asia Dollar Index, which tracks the region’s 10 most-used currencies excluding the yen, was set for its highest close since August 1997.
Malaysia’s consumer prices rose 3.5 per cent in June from a year earlier, the most since March 2009, the government said on July 20. Bank Negara Malaysia kept its overnight policy rate at 3.25 per cent on July 7, after lifting it once in 2011 and three times in 2010. Policy makers next meet on Sept. 8. -- Bloomberg
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