Ringgit Halts Three-Day Drop as U.S. Seen Weighing Budget Deal

Malaysia’s ringgit rose for the first time in four days as speculation U.S. policy makers are moving closer to a deal on budget revisions spurred demand for emerging-market assets.

President Barack Obama is considering a Social Security budget concession after House Speaker John Boehner dropped his opposition to raising taxes for some top earners, two people familiar with the talks said after the officials met yesterday. The Bank of Japan (8301) will meet tomorrow as incoming Prime Minister Shinzo Abe presses it to engage in further policy easing. Malaysia will report November inflation data on Dec. 19.

“The likely stimulus out of Japan and some progress in discussions to avert the fiscal cliff have contributed to positive sentiment,” said Nizam Idris, head of Asian fixed- income and foreign-exchange strategy at Macquarie Bank Ltd. in Singapore. “Range trade for the ringgit is still quite likely.”

The ringgit climbed 0.1 percent to 3.0565 per dollar as of 8:38 a.m. in Kuala Lumpur, according to data compiled by Bloomberg. The currency has gained 3.6 percent this year. One- month implied volatility, a measure of expected moves in exchange rates used to price options, rose 34 basis points, or 0.34 percentage point, to 4.53 percent.

Malaysia’s consumer price index probably increased 1.4 percent in November after rising 1.3 percent in October, the slowest pace in more than two years, according to the median estimate of economists in a Bloomberg survey before a government report tomorrow.

Government bonds were little changed yesterday. The yield on the 3.418 percent notes due August 2022 held at 3.52 percent, according to Bursa Malaysia.

To contact the reporter on this story: Liau Y-Sing in Kuala Lumpur at yliau@bloomberg.net

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

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