Ringgit snaps two-day loss

Malaysia’s ringgit rose for the first time in three days as signs the global economy is improving brightened the outlook for exports and spurred demand for riskier assets, helping emerging markets attract funds.

The MSCI Asia Pacific Index of stocks reversed yesterday’s losses after Japan’s economy returned to growth and initial jobless claims in the US unexpectedly dropped. The two countries are Malaysia’s third and fourth-biggest export markets, respectively. The Southeast Asian nation’s central bank kept its benchmark interest rate at three per cent yesterday, a decision that was predicted by all 20 economists in a Bloomberg survey.

The ringgit appreciated 0.1 per cent to 3.1053 per dollar as of 9:29am in Kuala Lumpur, paring the week’s decline to 0.3 per cent, according to data compiled by Bloomberg. The currency touched 3.0945 today, the strongest since March 1. One-month implied volatility, a measure of expected moves in exchange- rates used to price options, increased one basis point, or 0.01 percentage point, to 6.67 per cent.

"The Malaysian currency is getting interest because its growth prospects are good given the recovery in Japan and the US," said Yeah Kim Leng, chief economist at RAM Holdings Bhd in Kuala Lumpur. "The ringgit should continue to strengthen."

Japan’s gross domestic product rose an annualised 0.2 per cent in the three months through December, the Cabinet Office said today, compared with a preliminary calculation of a 0.4 per cent contraction. Jobless claims in the US fell to 340,000 for the week ended March 2, the Labor Department said in Washington yesterday. That was less than the median estimate of 355,000 in a Bloomberg survey of 50 economists.

Malaysian government bonds advanced this week. The yield on the 3.418 per cent notes due August 2022 fell one basis point to 3.46 per cent, according to data compiled by Bloomberg. The rate was little changed today.-- Bloomberg