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Ringgit Advances on Bets Germany Will Ease Greece Bailout Terms

Aug. 22 (Bloomberg) -- Malaysia’s ringgit rose the most in more than two weeks after Germany indicated it may be willing to relax Greece’s bailout conditions, increasing demand for riskier assets.

Greek Prime Minister Antonis Samaras, whose government favors an extension of its fiscal adjustment program by two years, travels to Berlin and Paris on Aug. 24 and 25 to discuss the country’s deficit reduction efforts as part of terms to receive European help to tackle its debt crisis. Chancellor Angela Merkel is considering easing the requirements, two German lawmakers said last week.

“It seems like Germany is willing to ease some of the pressure on Greece,” said Sim Moh Siong, a currency strategist at Bank of Singapore Ltd. “In the near term, emerging market currencies like the ringgit will be trading sideways but the bias is for them to strengthen eventually.”

The ringgit gained 0.3 percent, the most since Aug. 6, to 3.1230 per dollar as of 4:03 p.m. in Kuala Lumpur, according to data compiled by Bloomberg. The currency closed at 3.1323 on Aug. 17 and trading resumed today after the Eid al-Fitr holidays on Aug. 20 and yesterday. One-month implied volatility, a measure of exchange-rate swings used to price options, declined 10 basis points to 6.60 percent.

Government bonds advanced. The yield on the 3.314 percent notes due October 2017 fell three basis points, or 0.03 percentage point, to 3.32 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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