Ringgit Climbs to Two-Week High as Data Boost Export Outlook

Malaysia’s ringgit advanced to a two-week high after data suggested the U.S. economic recovery is gaining ground, brightening the outlook for the Southeast Asian nation’s exports. Government bonds were unchanged.

Orders for U.S. durable goods excluding transportation equipment climbed in January by the most in a year, while pending sales of existing homes jumped more than economists had estimated, separate reports showed yesterday. The world’s largest economy was the third biggest buyer of Malaysian goods in December. Malaysia is said to be planning rules to tighten the onshore dollar-ringgit fixing, according to a draft statement from the Financial Markets Association of Malaysia.

“The U.S. data was positive,” said Jonathan Cavenagh, a currency strategist at Westpac Banking Corp. (WBC) in Singapore. “The fixing rules are probably designed to give more confidence and I don’t think it’s going to have a huge impact on market sentiment either way.”

The ringgit gained 0.3 percent to 3.0910 per dollar as of 4:06 p.m. in Kuala Lumpur, according to data compiled by Bloomberg. The currency touched 3.0875, the strongest since Feb. 15. One-month implied volatility, a measure of expected moves in exchange rates used to price options, rose 13 basis points, or 0.13 percentage point, to 7.23 percent, the data show.

Under the proposed rules to take effect tomorrow, the cap on the bid and ask spread for the dollar-ringgit fixing will be lowered to 10 pips from 20, according to the statement from the association obtained by Bloomberg. A pip is the smallest unit of a currency’s price, which in U.S. dollar terms equals one- hundredth of a cent.

The yield on the 3.314 percent sovereign notes due October 2017 was unchanged at to 3.22 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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