The ringgit rose to its strongest level in almost two weeks after Federal Reserve Chairman Ben S. Bernanke signaled the supply of dollars may be boosted to support the U.S. recovery.
Bernanke said the central bank was prepared to add to its stimulus if necessary, keeping speculation alive that the Fed might embark on a third round of asset purchases, a policy known as quantitative easing. The Fed reiterated its view that borrowing costs are likely to remain “exceptionally low” at least through late 2014.
“The possibility of QE3 is still very much on the cards,” said Chua Hak Bin, an economist at Bank of America Corp. in Singapore. “This is supportive of monetary conditions and global growth and will support Asian currencies including the ringgit.”
The ringgit rose 0.3 percent to 3.0518 per dollar as of 4:26 p.m. in Kuala Lumpur, after touching 3.0490, the strongest since April 13, according to data compiled by Bloomberg. One-month implied volatility, a measure of exchange-rate swings used to price options, fell 35 basis points to a one-year low of 5.5 percent.
Government bonds declined yesterday. The yield on the 3.434 percent notes due August 2014 was little changed at 3.11 percent, according to Bursa Malaysia.