June 21 (Bloomberg) -- Malaysia’s ringgit advanced to its highest level in a week as concern that Greece will default eased, bolstering demand for emerging market assets.
The ringgit rose along with other Asian currencies and stocks after Greek Prime Minister George Papandreou gave assurance that his government will take the measures to obtain financial aid. A Malaysian government report tomorrow may show inflation quickened to 3.3 percent in May from April’s 3.2 percent pace, the fastest in two years, according to the median estimate of economists surveyed by Bloomberg.
“The easing concern over Greece debt problems is positive for Asian currencies,” said Calbert Loh, head of treasury at Bangkok Bank Bhd. in Kuala Lumpur. “People are also expecting Malaysia’s consumer price index to creep up.”
The ringgit strengthened 0.3 percent to 3.0310 per dollar as of 5:04 p.m. in Kuala Lumpur, according to data compiled by Bloomberg. The currency fell 0.3 percent yesterday.
Luxembourg Prime Minister Jean-Claude Juncker soothed concern that Greece will default yesterday by saying Papandreou told him that he would take steps to avoid default before a confidence vote later today.
Bank Negara Malaysia forecasts consumer prices will rise 2.5 percent to 3.5 percent this year, compared with 1.7 percent in 2010, driven by higher commodity and energy prices. The central bank raised its overnight policy rate to 3 percent from 2.75 percent on May 5.
Borrowing costs may climb to 3.25 percent by the end of this year, according to the median estimate of economists in a Bloomberg News survey. The bank next meets to review rates on July 7.
Government bonds rose. The yield on the 4.262 percent notes due September 2016 dropped one basis point to 3.51 percent, according to Bursa Malaysia. Bank Negara will auction 500 million ringgit of 119-day Islamic notes tomorrow, according to the central bank’s website.
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