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Ringgit Has Biggest Weekly Advance in Six Months as Polls Near

April 5 (Bloomberg) -- Malaysia’s ringgit had its biggest weekly gain since September after Prime Minister Najib Razak dissolved parliament, paving the way for polls to be held in the coming weeks. Government bonds advanced.

The currency climbed to a two-month high today as the Election Commission prepares to meet over the next few days to set a date for the vote, which must be held within 60 days of the dissolution on April 3. If the ruling alliance secures a two-thirds parliamentary majority, investors should buy the ringgit as Najib will continue economic reforms, according to a research note today from Skandinaviska Enskilda Banken AB.

“We’re very much into the election mode,” said Rob Ryan, a Singapore-based currency strategist at Royal Bank of Scotland Plc. “There’s more volatility to come but the assumption is that the less likely an upset, the stronger the ringgit is going to be.”

The ringgit gained 1 percent for the week and 0.6 percent today to 3.0625 per dollar as of 4:27 p.m. in Kuala Lumpur, according to data compiled by Bloomberg. The currency touched 3.0609 today, the strongest level since Jan. 28. Its five-day advance is the biggest since Sept. 14. One-month implied volatility, a measure of expected moves in exchange rates used to price options, rose 13 basis points, or 0.13 percentage point, to 6.76 percent.

Both Najib and opposition leader Anwar Ibrahim have said they are “cautiously optimistic” about the poll. The ruling Barisan Nasional alliance is seeking to improve its performance after it recorded its narrowest victory ever in the last election in 2008.

Exports Drop

Malaysia’s economic growth may accelerate after the election as private investment resumes when uncertainties relating to the poll are removed, according to a research note from Australia & New Zealand Banking Group Ltd. on April 3.

Exports fell 7.7 percent in February from a year earlier, the biggest drop since September 2009, official data released today show. That compared with the 4.8 percent decline forecast by economists in a Bloomberg survey and the 3.5 percent increase recorded in January.

The yield on the 3.26 percent government bonds due March 2018 fell one basis point today and this week to 3.21 percent, according to data compiled by Bloomberg.

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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