Ringgit Halts Three-Day Drop as U.S. Seen Weighing Budget Deal

Dec. 18 (Bloomberg) -- Malaysia’s ringgit rose for the first time in four days as speculation U.S. policy makers are making progress to reach a deal on budget revisions spurred appetite for emerging-market assets.

President Barack Obama lowered his tax revenue demand by $200 billion and offered to start tax rate increases at $400,000 in income, moving closer to a budget deal with House Speaker John Boehner, according to a person familiar with the talks. The Bank of Japan will meet tomorrow as incoming Prime Minister Shinzo Abe presses it to engage in further policy easing. Malaysia will report November inflation data tomorrow.

“The likely stimulus out of Japan and some progress in discussions to avert the fiscal cliff have contributed to positive sentiment,” said Nizam Idris, head of Asian fixed-income and foreign-exchange strategy at Macquarie Bank Ltd. in Singapore. “Range trading for the ringgit is still quite likely.”

The ringgit climbed 0.2 percent to 3.0555 per dollar as of 4:28 p.m. in Kuala Lumpur, according to data compiled by Bloomberg. The currency has gained 3.7 percent this year. One-month implied volatility, a measure of expected moves in exchange rates used to price options, fell 29 basis points, or 0.29 percentage point, to 3.90 percent.

Malaysia’s consumer price index probably increased 1.4 percent in November after rising 1.3 percent in October, the slowest pace in more than two years, according to the median estimate of economists in a Bloomberg survey.

The yield on the 3.492 percent government notes due March 2020 held at 3.48 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.