Ringgit Climbs Most in a Month on U.S. Economic Growth Optimism

The ringgit rose the most in more than a month on optimism economic growth in the U.S., Malaysia’s fourth-biggest export market this year, will support demand for the Southeast Asian nation’s goods.

The FTSE Bursa Malaysia KLCI (FBMKLCI) Index of shares climbed to a record high after the Federal Reserve Chairman Ben S. Bernanke said in Washington yesterday the world’s largest economy is still growing modestly and the $40 billion monthly purchases of mortgage-backed securities will be maintained. U.S. September new home sales increased 5.7 percent to an annual pace of 389,000, the most since April 2010, official data showed, indicating that the industry whose decline was at the heart of the recession is bouncing back.

“Expectations that the U.S. will continue to grow have helped improve risk appetite,” said Saktiandi Supaat, head of foreign-exchange research at Malayan Banking Bhd. (MAY) in Singapore. “The better home sales data in the U.S. also helped.”

The ringgit surged 0.8 percent to 3.0385 per dollar as of 4:48 a.m. in Kuala Lumpur, the biggest gain since Sep. 14, according to data compiled by Bloomberg. One-month implied volatility, a measure of exchange-rate swings used to price options, dropped 10 basis points, or 0.10 percentage point, to 6.00 percent, taking the weekly decline to 40 basis points. Local markets will be shut for a public holiday tomorrow.

Government bonds were steady. The yield on the 3.418 percent notes maturing in August 2022 held at 3.45 percent, according to Bursa Malaysia.

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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