Ringgit Forwards Rise From Seven-Month Low Ahead of Cyprus Vote

Malaysian ringgit forwards climbed from their weakest level in more than seven months ahead of a vote by Cypriot lawmakers on a bank-deposit levy aimed at securing aid from the European Union.

Euro-area finance ministers told Cyprus to raise 5.8 billion euros ($7.5 billion) from depositors to unlock emergency loans. Crude oil futures in New York traded near a one-month high as European policy makers signaled flexibility in applying the tax announced three days ago. Investors should buy Malaysia’s ringgit as a likely rise in oil prices will boost the economic outlook for the petroleum-exporting nation, according to Credit Agricole Private Banking.

“The pressure seems to be quite united in telling Cyprus to brace for a cut,” said Enrico Tanuwidjaja, an economist in Singapore at Royal Bank of Scotland Group Plc. “There seems to be a limited downside reaction but we still can’t say for certain the Cyprus parliament will not surprise on the downside.”

Twelve-month non-deliverable forwards strengthened 0.2 percent, the first gain in five days, to 3.1868 per dollar as of 9:39 a.m. in Kuala Lumpur, according to data compiled by Bloomberg. They touched 3.2015 yesterday, which was the weakest level since July 30.

The contracts to fix an exchange rate in a year’s time were at a 1.9 percent discount to the spot rate, which advanced 0.2 percent to 3.1250. Non-deliverable forwards are settled in dollars. One-month implied volatility in the ringgit, a measure of expected moves in exchange rates used to price options, rose three basis points, or 0.03 percentage point, to 7.27 percent.

Malaysian consumer prices probably climbed 1.5 percent in February from a year earlier, after rising 1.3 percent the previous month, according to the median estimate of economists in a Bloomberg survey ahead of March 20 government report.

Government bonds fell. The yield on the 3.26 percent notes due March 2018 rose one basis point to 3.24 percent, according to data compiled by Bloomberg.

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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