Ringgit Rises From Two-Week Low as German Data Spur Risk-Taking

Malaysia’s ringgit rebounded from near a two-week low as a pickup in German investor confidence allayed concern about Europe’s growth outlook and spurred risk- taking. Government bonds gained before inflation data today.

The ZEW Center for European Economic Research in Mannheim said yesterday its index of investor and analyst expectations jumped to 31.5 in January, the highest in 2 1/2 years. The ringgit declined 1 percent in the last two days on concern Malaysia’s government will call an early election that may loosen its grip on power. The currency is still 0.6 percent stronger for the month.

“Fears of Europe’s core slipping into a deep recession are” receding, said Vishnu Varathan, a Singapore-based economist at Mizuho Corporate Bank Ltd. “It’s not like the European situation has turned completely rosy, but at least there won’t be an imminent implosion.”

The ringgit strengthened 0.2 percent, the most since Jan. 17, to 3.0374 per dollar as of 9:25 a.m. in Kuala Lumpur, according to data compiled by Bloomberg. The currency touched 3.0493 yesterday, the weakest level since Jan. 8. One-month implied volatility, a measure of expected moves in exchange rates used to price options, increased one basis point to 5.38 percent.

Inflation Data

Prime Minister Najib Razak must dissolve parliament by April 28. His approval rating dropped to a 16-month low in December, the Merdeka Center for Opinion Research said in a Jan. 10 statement. The benchmark FTSE Bursa Malaysia KLCI Index of shares rose 0.3 percent today, after sliding 2.9 percent in the last two days.

Malaysian consumer prices gained 1.4 percent in December from a year earlier, after advancing 1.3 percent in November, according to the median estimate of economists surveyed by Bloomberg before official figures due today.

The yield on the government’s 3.172 percent bonds due July 2016 fell two basis points, or 0.02 percentage point, to 3.13 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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