Ringgit Rebounds as IMF Predicts Chinese Recovery Next Year

The ringgit rebounded from its biggest loss in four months on optimism Chinese growth will recover, brightening the outlook for Malaysian exports.

The International Monetary Fund predicted today Asia’s largest economy will expand 8.2 percent in 2013, compared with 7.8 percent this year, while Malaysia’s gross domestic product will increase 4.7 percent from 4.4 percent. A purchasing managers’ index for services in China released yesterday by HSBC Holdings Plc and Markit Economics indicated a preliminary reading of 54.3 in September, compared with 52 the month before. China was Malaysia’s second-biggest export market in August.

“The better Chinese data is giving some support to Asian currencies including the ringgit,” said Azmi Shukri Rahman, a foreign-exchange trader at CIMB Investment Bank Bhd. in Kuala Lumpur.

The ringgit advanced 0.4 percent to 3.0642 per dollar as of 9:31 a.m. in Kuala Lumpur, according to data compiled by Bloomberg. The currency dropped 0.8 percent yesterday, the most since June 1. The ringgit is unlikely to strengthen beyond 3.06 per dollar, Azmi Shukri said. One-month implied volatility, a measure of exchange-rate swings used to price options, climbed two basis points to 7.02 percent.

Industrial production in Malaysia fell 2 percent in August from a year earlier after increasing 1.4 percent in July, according to the median estimate of 18 economists in a Bloomberg News survey before official data due tomorrow.

Government bonds declined. The yield on the 3.314 percent notes due October 2017 rose one basis point, or 0.0 percentage point, to 3.30 percent, according to Bursa Malaysia. The treasury will auction 2.5 billion ringgit ($816 million) of Shariah-compliant securities maturing in August 2017 on Oct. 12, the central bank said on its website yesterday.

To contact the reporter on this story: Elffie Chew in Kuala Lumpur at Echew16@bloomberg.net

To contact the editor responsible for this story: James Regan at jregan19@bloomberg.net.

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