Ringgit rallies as Syria concern eases
Malaysia’s ringgit had its biggest two-day advance since May as speculation the US will hold back from a military attack against Syria fueled demand for emerging-market assets.
The MSCI Asia Pacific index of stocks climbed for a ninth day, the longest rally this year. Russia’s bid to get Syria to surrender its chemical weapons is a "potentially positive development" that could avert a US strike, President Barack Obama said in an interview with NBC News yesterday. The ringgit dropped 6.7 per cent this year and Malayan Banking Bhd forecast in a report yesterday the weakness will boost the nation’s exports, which rebounded in July after a five-month contraction.
"A lot of currencies that have been under pressure are seeing some of the selling abating," said Nick Verdi, a foreign-exchange strategist at Barclays Plc in Singapore. "There’s more positive risk appetite generally."
The ringgit strengthened 0.4 per cent to 3.277 per dollar as of 4.19pm in Kuala Lumpur, according to data compiled by Bloomberg. It climbed 1.5 per cent in two days. One-month implied volatility, a measure of expected moves in the exchange rate used to price options, fell 30 basis points to 9.6 per cent.
A government report tomorrow may show factory output rose 4.9 per cent in July from a year earlier, after climbing 3.3 per cent in June, according to the median estimate of economists surveyed by Bloomberg.
The "immediate" export outlook for August is "positive" amid a competitiveness boost from the weaker ringgit and improving commodity prices, according to the Maybank report, whose authors included Suhaimi Ilias, the Kuala Lumpur-based chief economist. The lender expects economic growth to quicken to 4.8 per cent in the second half from 4.2 per cent in the first six months.
Government bonds advanced. The yield on the 3.26 per cent notes due March 2018 dropped one basis point, or 0.01 percentage point, to 3.59 per cent, according to data compiled by Bloomberg.-- Bloomberg