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Ringgit Rebounds on Speculation ECB Will Signal Easier Stance

Feb. 7 (Bloomberg) -- Malaysia’s ringgit climbed, rebounding from near a five-month low, on speculation the European Central Bank will signal an easier monetary-policy stance, which could increase fund flows into emerging markets.

ECB President Mario Draghi may make dovish remarks after a meeting of policy makers today, although the ECB probably won’t alter policy, according to analysts in a Bloomberg survey. Malaysia’s economic growth last year likely exceeded the government’s 4.5 percent to 5 percent target range, Second Finance Minister Ahmad Husni Mohamad Hanadzlah said today.

“The market is taking some positions ahead of the ECB meeting,” said Andy Ji, a Singapore-based foreign-exchange strategist at Commonwealth Bank of Australia. “There’s expectations that it might ease a bit more through different ways.”

The ringgit strengthened 0.3 percent to 3.0925 per dollar, as of 5:02 p.m. in Kuala Lumpur, according to data compiled by Bloomberg. It touched 3.1048 earlier, near the 3.1190 level reached on Feb. 4 that was the weakest since Sept. 7. One-month implied volatility, a measure of expected moves in the exchange rate used to price options, was unchanged at 7.7 percent.

Malaysian exports rose 1.4 percent in December from a year earlier, compared with 3.3 percent in November, while industrial-production growth eased to 6 percent from 7.5 percent, according to separate Bloomberg surveys of economists before official figures due tomorrow.

Bonds Advance

Twelve-month non-deliverable forwards gained 0.2 percent to 3.1543 per dollar, data compiled by Bloomberg show. The contracts to buy or sell the ringgit in a year traded at a 2 percent discount to the spot rate. Non-deliverable forwards are settled in dollars.

Sovereign bonds advanced. The yield on the 3.314 percent notes due October 2017 declined one basis point to 3.24 percent, according to Bursa Malaysia. The government sold 3 billion ringgit ($970 million) of Islamic debt maturing in August 2028 at 3.871 percent at an auction today, according to data published on the central bank’s website. Demand exceeded the amount offered by 2.22 times.

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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