Ringgit Advances to 10-month High on U.S. Bond-Buying Optimism

Malaysia’s ringgit climbed to a 10- month high as optimism the Federal Reserve will keep pumping funds into its economy bolstered demand for riskier assets.

The MSCI Asia Pacific Index (MXAP) of stocks rallied for a second day after Fed Chairman Ben S. Bernanke said yesterday the central bank is monitoring the impact of its bond purchases on the economy. Treasury Secretary Timothy F. Geithner warned that failure to raise the U.S. debt ceiling by early March would “impose severe economic hardship.” Malaysia’s factory output rose 7.5 percent in November, beating the 5.9 percent median estimate of analysts in a Bloomberg survey, official data show.

The ringgit strengthened 0.4 percent to 3.0041 per dollar as of 9:57 a.m. in Kuala Lumpur, according to data compiled by Bloomberg. It reached 3.0032, the highest level since March 9 last year, after dropping 0.6 percent in December, the fourth- worst performance among Asia’s 11 most-active currencies.

“Expectations that the U.S. will continue with its monetary easing is helping Asian currencies,” said Saktiandi Supaat, head of foreign-exchange research at Malayan Banking Bhd. in Singapore. “The ringgit, which was lagging most Asian currencies in the past month, could be getting some attention because of the better economic data.”

One-month implied volatility, a measure of expected moves in the exchange rate used to price options, gained nine basis points, or 0.09 percentage point, to 5.11 percent.

Government bonds were little changed. The yield on the 3.418 percent notes maturing in August 2022 held at 3.49 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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