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Ringgit Climbs to 10-Month High After Peaceful Opposition Rally

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Jan. 14 (Bloomberg) -- Malaysia’s ringgit climbed to a 10-month high after an opposition rally over the weekend ended peacefully, allaying concerns about political unrest.

The currency rose for a sixth day, its longest run of gains since August. Police estimate about 50,000 people seeking free and fair elections assembled in a stadium in Kuala Lumpur, avoiding a repeat of earlier street demonstrations when officers clashed with protesters. Five-year credit-default swaps insuring Malaysian debt against non-payment jumped the most since May last week. Prime Minister Najib Razak, who has to call for national polls before May, has embarked on a $444 billion, 10-year infrastructure development plan to spur economic growth.

“Whoever wins the election should not step back from the development plan,” said Enrico Tanuwidjaja, a Singapore-based economist at Royal Bank of Scotland Group Plc. “We’re generally neutral on the ringgit because of the impending election.”

The ringgit rose 0.1 percent to 3.0178 per dollar as of 4:35 p.m. in Kuala Lumpur, according to data compiled by Bloomberg. The currency touched 3.0153, the strongest since March 12, and its winning streak is the longest since a six-day advance that ended Aug. 1. One-month implied volatility, a measure of expected moves in exchange rates used to price options, was little changed at 5.02 percent.

Default swaps tied to Malaysian debt climbed 11 basis points, or 0.11 percentage point, last week to 81, according to data provider CMA, which is owned by McGraw-Hill Cos. and compiles prices quoted by dealers in privately negotiated markets. They fell three basis points to 78 basis points today.

Government bonds were steady. The yield on the 3.492 percent notes due March 2020 held at 3.41 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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