Malaysia’s ringgit headed for its biggest two-day advance since May as speculation the U.S. will hold back from a military attack against Syria fuelled demand for emerging-market assets.
The MSCI Asia Pacific index of stocks climbed for a ninth day, the longest rally this year. Russia’s bid to get Syria to surrender its chemical weapons is a “potentially positive development” that could avert a U.S. strike, President Barack Obama said in an interview with NBC News yesterday. The ringgit dropped 6.5 percent this year and Malayan Banking Bhd. forecast in a report yesterday the weakness will boost the nation’s exports, which rebounded in July after a five-month contraction.
“A lot of currencies that have been under pressure are seeing some of the selling abating,” said Nick Verdi, a foreign-exchange strategist at Barclays Plc in Singapore. “There’s more positive risk appetite generally.”
The ringgit strengthened 0.7 percent to 3.2685 per dollar as of 10:13 a.m. in Kuala Lumpur, according to data compiled by Bloomberg. It climbed 1.8 percent in two days, the biggest gain since May 6. One-month implied volatility, a measure of expected moves in the exchange rate used to price options, fell 25 basis points to 9.65 percent.
A government report tomorrow may show factory output rose 4.9 percent in July from a year earlier, after climbing 3.3 percent in June, according to the median estimate of economists surveyed by Bloomberg.
The “immediate” export outlook for August is “positive” amid a competitiveness boost from the weaker ringgit and improving commodity prices, the Maybank report, whose authors included chief economist Suhaimi Ilias, said. The lender expects economic growth to quicken to 4.8 percent in the second half from 4.2 percent in the first six months.
Government bonds advanced. The yield on the 3.26 percent notes due March 2018 dropped one basis point, or 0.01 percentage point, to 3.58 percent, the lowest level in almost three weeks, according to data compiled by Bloomberg.
To contact the reporter on this story: Liau Y-Sing in Kuala Lumpur at firstname.lastname@example.org