Ringgit Climbs as China Economic Recovery Seen Boosting Exports

Malaysia’s ringgit rose, halting a two-day loss, ahead of a report that’s forecast to show growth in China’s economy accelerated, improving the outlook for Asian exports. Government bonds declined.

Gross domestic product in China, the Southeast Asian nation’s biggest overseas market, increased 7.8 percent in the fourth quarter from a year earlier, compared with 7.4 percent in the previous period, according to the median estimate of analysts surveyed by Bloomberg before data tomorrow. The Malaysian Institute of Economic Research said today it maintains its prediction for a 5.1 percent rise in local GDP last year and 5.6 percent in 2013.

“Market players are expecting pretty strong Chinese data,” said Andy Ji, a Singapore-based foreign-exchange strategist at Commonwealth Bank of Australia. “That’s going to support risk appetite.”

The ringgit strengthened 0.2 percent to 3.0150 per dollar as of 10:23 a.m. in Kuala Lumpur, according to data compiled by Bloomberg. It touched 3.0125 earlier, near the 3.0032 level reached on Jan. 15 that was the strongest since March 9.

One-month implied volatility, a measure of expected moves in the exchange rate used to price options, rose eight basis points, or 0.08 percentage point, to 5.15 percent.

Commonwealth Bank of Australia raised its forecast for most Asian currencies in a research note released yesterday, to reflect expectations the dollar will “remain soft” over 2013. The lender predicts the ringgit will strengthen to 2.85 per dollar by year-end, compared with an earlier estimate of 3.00.

Malaysian inflation may have quickened to 1.4 percent in December from a year earlier, compared with 1.3 percent in the previous month, a Bloomberg survey showed ahead of a Jan. 23 government report. MIER is predicting a rate of 1.7 percent for the whole of 2012 and 2.5 percent for this year.

The yield on the 3.314 percent sovereign notes due October 2017 climbed five basis points to 3.26 percent, according to prices from 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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