Malaysia’s ringgit advanced the most in three weeks as recent losses were judged excessive, and on signs the U.S. economy is improving. Government bonds rose.
The ringgit fell the most against the dollar in 16 months last week on speculation Prime Minister Najib Razak will call an early election that may weaken the coalition’s grip on power. The greenback’s 14-day relative strength index reached 70 today, a level that suggests it may decline. The U.S. Institute for Supply Management’s manufacturing index rose to a nine-month high of 53.1 in January, beating all estimates in a Bloomberg survey of 86 economists, official data showed Feb. 1.
“The ringgit is seeing a technical rebound because it was oversold last week on election concerns,” said Saktiandi Supaat, head of foreign-exchange research at Malayan Banking Bhd. in Singapore. “ Asian currencies are seeing some improvement as the U.S. ISM Manufacturing Index is showing signs of expansion.”
The ringgit strengthened 0.4 percent to 3.1074 per dollar as of 9:45 a.m. in Kuala Lumpur, according to data compiled by Bloomberg. That is the biggest increase since Jan. 10. The currency dropped 2.3 percent last week, the most since Sept. 23, 2011. One-month implied volatility, a measure of expected moves in the exchange rate used to price options, slid five basis points, or 0.05 percentage point, to 7.95 percent.
Malaysia’s central bank held its benchmark interest rate at 3 percent on Jan. 31, a decision predicted by all 22 economists surveyed by Bloomberg News. The monetary authority last changed the rate in May 2011.
The yield on the 3.418 percent bonds maturing in August 2022 dropped one basis point to 3.51 percent, according to Bursa Malaysia.
To contact the reporter on this story: Elffie Chew in Kuala Lumpur at firstname.lastname@example.org.