Malaysia’s ringgit headed for its biggest weekly gain in six on optimism the nation’s economic growth will accelerate this year.
The currency traded at a one-week high after the central bank said on March 20 that gross domestic product will increase as much as 6 percent this year from 5.6 percent in 2012. “The Malaysian financial sector is well placed to cope with adverse external developments,” Bank Negara Malaysia Governor Zeti Akhtar Aziz told reporters in Kuala Lumpur the same day.
The ringgit strengthened 0.5 percent this week to 3.1094 per dollar as of 4:32 p.m. in Kuala Lumpur, the strongest level since March 14, according to data compiled by Bloomberg. It rose 0.4 percent today. One-month implied volatility, a measure of expected moves in exchange rates used to price options, decreased one basis point to 7.07 percent today and advanced 24 basis points, or 0.24 percentage point, this week.
“Bank Negara’s reassurance that the economy is in healthy shape is helping to support the currency,” said Yeah Kim Leng, chief economist at RAM Holdings Bhd. in Kuala Lumpur. “The ringgit should continue to strengthen and could touch 2.90 to 2.95 per dollar by year-end.”
Prime Minister Najib Razak must dissolve Parliament by April 28 and hold a general election within 60 days. The premier’s approval rating fell to an 18-month low in February, according to a poll by the Merdeka Center for Opinion Research released Feb. 26.
The yield on the 3.492 percent bonds due March 2020 was little changed at 3.42 percent today, according to data compiled by Bloomberg. It increased one basis point for the week.