Ringgit climbs to two-week high

Malaysia’s ringgit advanced to a two-week high after data suggested the US economic recovery is gaining ground, brightening the outlook for the Southeast Asian nation’s exports. Government bonds were unchanged.

Orders for US durable goods excluding transportation equipment climbed in January by the most in a year, while pending sales of existing homes jumped more than economists had estimated, separate reports showed yesterday. The world’s largest economy was the third biggest buyer of Malaysian goods in December. Malaysia is said to be planning rules to tighten the onshore dollar-ringgit fixing, according to a draft statement from the Financial Markets Association of Malaysia.

"The US data was positive," said Jonathan Cavenagh, a currency strategist at Westpac Banking Corp in Singapore. "The fixing rules are probably designed to give more confidence and I don’t think it’s going to have a huge impact on market sentiment either way."

The ringgit gained 0.3 per cent to 3.0910 per dollar as of 4:06pm in Kuala Lumpur, according to data compiled by Bloomberg. The currency touched 3.0875, the strongest since February 15. One-month implied volatility, a measure of expected moves in exchange rates used to price options, rose 13 basis points, or 0.13 percentage point, to 7.23 per cent, the data show.

Under the proposed rules to take effect tomorrow, the cap on the bid and ask spread for the dollar-ringgit fixing will be lowered to 10 pips from 20, according to the statement from the association obtained by Bloomberg. A pip is the smallest unit of a currency’s price, which in US dollar terms equals one- hundredth of a cent.

The yield on the 3.314 per cent sovereign notes due October 2017 was unchanged at to 3.22 per cent, according to Bursa Malaysia.-- Bloomberg