Ringgit Rises From 3-Month Low on China Production; Bonds Gain

Malaysia’s ringgit gained the most in two weeks after a report today showed manufacturing in China expanded at the fastest pace in seven months in November, bolstering the outlook for the region’s exporters.

The currency climbed from a three-month low as regional stocks rebounded after reports showed factories in China cranked up production. A Bank Negara Malaysia report issued late yesterday showed overseas investors raised their holdings of ringgit-denominated debt for an eighth straight month to an all- time high in October. Government bonds gained.

“China’s manufacturing data supports risk-on trades and should be positive for equities and currencies,” said Godwin Chan, a foreign-exchange trader at OSK Investment Bank Bhd. in Kuala Lumpur. “We could see a relief rally this month.”

The ringgit appreciated 0.6 percent to 3.1520 per dollar as of 4:20 p.m. in Kuala Lumpur, the biggest increase since Nov. 18, according to data compiled by Bloomberg. It earlier reached 3.1703, the weakest level since Aug. 17.

China’s Purchasing Managers’ Index rose to 55.2 from 54.7 in October, the logistics federation said on its website today. That was more than the 54.8 median estimate of 14 economists surveyed by Bloomberg News. A separate report by HSBC Holdings Plc and Markit Economics also showed faster expansion.

China is Malaysia’s second-largest export market after Singapore, accounting for 13 percent of shipments this year through September, according to the trade ministry.

Bonds Advance

Three-year notes gained, adding to its best month since April, on optimism a rebound in the nation’s currency will attract more foreign funds to local assets.

The yield on the 3.21 percent note fell one basis point or 0.01 percentage point, to 3.15 percent, according to Bursa Malaysia. The price increased 0.02, or 20 sen per 1,000 ringgit face amount, to 100.14. The yield fell 12 basis points in November, the most in seven months.

Overseas investors owned 127 billion ringgit ($40.2 billion) of local bills and debt as of end-October, up 83 percent from the end of 2009, according to data published by the central bank on its website. Their stake in government bonds rose 76 percent to a record 71.9 billion ringgit, the data show.

To contact the reporter on this story: David Yong in Singapore at dyong@bloomberg.net.

To contact the editor responsible for this story: Sandy Hendry at shendry@bloomberg.net.

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